Crypto

Germany Crypto Tax Guide in 2023

Published

2 years ago

May 23, 2023

Cryptocurrencies became very popular in Germany. Currently it’s estimated that 5.8% of Germans own cryptocurrency, with most crypto owners using Bitcoin.

Germany is not usually known for its low or favorable tax rates. However, Germany does possess a relatively favorable tax code for crypto. It also has advanced technological infrastructures, allowing it to be one of the most accessible countries for crypto users.

Germany is not a tax haven, nor is it a tax-free country on cryptocurrencies. However, it is a more favorable country for crypto investors due to its low tax rates on crypto exchanges.

Taxes can be applied to crypto if for several reasons, including you get paid in crypto or sell the crypto in under a year and earn over €600. Despite this, Germany remains one of the best places for crypto holders and we’re here to help you make the right choices.

Our team at Nomad Capitalist can help you make the best choices with your money. We believe that you should keep more of your money for you and your family. If you want to learn more about how we can help you, contact our staff today.

Why Germany?

Cryptocurrency has only increased in popularity in Germany over the last decade. When looking for the right place to invest in crypto, it’s a good idea to pay attention to local interest. Just a few stats to demonstrate just how important crypto is to the local economy in Germany:

5.8% of German people own cryptocurrency
69% of this percentage invest in Bitcoin
35% of German crypto holders use crypto for purchases
72% of German crypto holders spend at least €100 a month on purchases with crypto

These stats only serve to demonstrate that crypto is popular, though. How do we know that Germany offers favorable tax status for crypto buyers and sellers?

Germany is one of the best countries for crypto investment because its listed as a private money. This means that as a private investor in crypto you will not be taxed on any crypto held for over a year.

Crypto profits won’t be taxed as long as they’re lower than €600. However, this perk does not apply to businesses using crypto in purchasing or paying employees. These revenues and payments will be subject to taxes as any other currencies.

German crypto taxes operate on the general principles of income tax.

Non-Legal Tender

In Germany, cryptocurrency is considered Privatvermögen by the German Federal Central Tax Office. Such private money is tax-free as long as crypto earnings don’t exceed €600.

This 0% tax rate is set out in Section 23 of the German Income Tax Act.

If an NFT is sold in Germany, the capital gain is taxed as if it was a crypto sale and based on the ordinary individual income tax rate.

Germany has boosted its economy with crypto taxes

Paying Employees With Crypto

Germany won’t tax crypto tokens that have no market value due to not being listed on any exchange. They will start to be taxed when they become tradable.

But crypto received as payment is taxed if it is an established cryptocurrency with a genuine market value.

Crypto investors have tax obligations in Germany

What Are The Crypto Taxes In Germany?

Capital Gains Tax

German income tax authorities are fairly friendly to any individual resident with crypto assets.

You are not required to pay capital gains tax on crypto assets held for more than a year.

So Germany-based crypto investors will not need to pay tax on sales of the likes of bitcoin and ether, as long as they’re held for more than a year.

However, businesses will have to pay capital gains tax on crypto assets held for over a year.

Unlike private investors, companies have to pay this tax on their crypto transactions.

Crypto investors in Germany need to keep an eye on the personal income tax rate

Income Tax Liability

Section 15 of the German Income Tax Act lays out corporate cryptocurrency taxation in Germany.

This section of the German Income Tax Act stipulates that there is no minimum holding period after which crypto tax exemption takes place.

LLCs, public companies, and other corporate entities will need to consider the income tax implications of having extensive crypto holdings or if they foresee participating in mining or staking activities.

Crypto tax software can alert you to German tax implications

If the company is a partnership, it is subject to income tax. In the same way any profits of a sole proprietor are subject to income tax.

Cryptocurrency taxation relates to the fact that crypto assets are considered private goods, unlike equities and stocks.

Discover the correlation between crypto taxes and income tax in our comprehensive guide

Any transactions where you dispose of a cryptocurrency are considered taxable events in Germany. If you sell, this taxable event will require you to work out your cost basis and report earnings.

Yet, if a cryptocurrency upgrades its token for functionality purposes, there are no crypto tax implications as German tax authorities do not view this as a taxable event.

Moving cryptocurrency between exchanges, wallets, or accounts is not considered a taxable event either.

There is a crypto tax liability if you use cryptocurrency to purchase something. You will have to pay taxes as, from a tax perspective, converting crypto capital assets to goods or services receives the same tax treatment as selling these assets on an exchange.

Cryptocurrency is not tax-free in Germany. Like in countries such as Australia, Canada, India, the UK, and the US, you must pay tax on crypto gains.

Also, for tax purposes, there are tax exemption limits for gifting cryptocurrency. This is tax-free, up to the maximum threshold of €20,000 for friends and €500,000 for family members.

If your crypto gift exceeds the threshold values, the tax rate varies according to your relationship with the recipient.

How Much Tax Do You Pay on Crypto Income in Germany?

How much tax you pay on anything is always a key consideration. When you receive an airdrop of crypto, there is no income tax to be paid as long as you haven’t needed to take any action to become the recipient.

Ordinarily, you will have to pay taxes in Germany on airdrops that count as other income. Although they are subject to exemptions, they are also taxable income, like gifts are taxable.

The German Finance Ministry has described instances where airdrop recipients would have to pay income tax if exchanging access to the airdrop for personal data or social media posts, for example.

If crypto gains generated from private sales transactions exceed €600 or you hold on to them for less than a year, they become subject to income tax.

Fiat Currency

So, if €601 or more profit is generated from private sales transactions, this is subject to income taxes. Crypto to crypto and crypto-to-fiat currency sales are also subject to income tax.

In Germany, that means you are subject to income tax when you trade crypto for another crypto and euros.

Speculative transactions is another label used for crypto tax purposes for these private sales transactions.

Section 22 of the Income Tax Act makes provisions for fee deduction as part of the cost basis. The cost basis is your outlay.

However, staked or lent cryptocurrencies remain tax-free if held for more than a year. Any crypto fees you pay are deductible for crypto tax purposes.

So, your earnings have no tax liability, as any increase in cryptocurrency value stays tax-free.

Tax-Free Capital Gains

If you held on to this investment for less than a year, such private sales transactions are taxed at your regular income tax rate. Being in a higher income bracket results in you paying a higher tax rate on these capital gains.

Most crypto investors in Germany buy, sell, and trade crypto as capital gains investing activity through a crypto exchange. This income is considered capital gains income.

However, if you have earned crypto through mining rewards that receive tax treatment as ordinary income unless you mine as a hobby which would make the profits non-taxable, yearly mining rewards would have to total no more than €256 in other income.

Essentially, there are two main tax implications in Germany: short-term gains taxed by the tax office and long-term profits tax-free.

You will need to include crypto income in your tax return in Germany

How to Calculate Crypto Taxes in Germany

German Cost Basis and Fair Market Value Method

Crypto tax software is available to assess how much of your Defi, NFT, or crypto income is taxable. If you lend crypto and are paid interest, you must pay income tax on the amount received.

The number of crypto transactions you carry out annually will have tax implications.

After you have accounted for all your transactions, you’ll be able to work out the cost basis and fair market value for all your investments.

For crypto tax purposes, subtract the sale price from the acquisition price to establish the amount of profit. This is the general formula for working out capital gain. This capital gain is then taxed using the personal income tax rate of 45% plus a 5.5% solidarity surcharge.

One of the best ways to understand cryptocurrency taxes in Germany is understanding the basics of income tax.

Selling these cryptocurrency tax software packages makes sense as it allows the calculation of crypto taxes in Germany for users of popular exchanges such as Coinbase, which the German regulator has recently censured for organizational deficiencies, or Binance, or if you utilize multiple exchanges.

Whatever your cryptocurrency tax calculator, it will adhere to one of the FIFO, LIFO, or HIFO cost basis methods of determining capital gains.

You will need to pay income tax on staking rewards related to the fair market value of any currency.

Conclusion

While Germany isn’t known for it’s tax benefits, it does have several perks to using cryptocurrencies in the country. The nation has one of the highest working trade systems. Buying, selling, and using crypto currencies is simple and safe.

Germany limits the amount of tax burden individuals owe for gains on cryptocurrency. This can make it a safe and reasonable place to live if you’re considering trading in crypto.

We hope this article helped you discover whether investing in crypto in Germany is right for you. Although there’s a lot to process and it can become very confusing. At Nomad Capitalist we’re here to make the process easier and more efficient. If you’re looking for experts to help you make the right decisions, become a client today.

German Cryptocurrency FAQS

What Are the Consequences of Crypto Tax Evasion?

It’s best to play safe and make an income tax return promptly. You need to file your tax return by July 31st of the following year. Basically, this means if you owe taxes from 2023, you need to file your return by July 31st of 2024.
Check that you pay the correct tax rate for your income tax bracket.
Establishing a channel of communication with the tax office is a good idea. You might think you are tax-exempt.
You might have missed a taxable transaction on your tax return.
If you fail to pay cryptocurrency taxes in Germany, you could receive a monetary fine and a maximum custodial sentence of five years.

What Is the German Crypto Tax Reporting Process?

Maintaining records of all your crypto transactions for a minimum of five years is standard practice. As the tax rate is based on the average individual income tax rate, the final withholding tax does not come into play.
You need to enter profits in Annex SO of the tax return. We are the crypto tax advisor you have been looking for to help you with your tax return.
The crypto tax year in Germany extends from the 1st of January to the 31st of December, in common with the tax year.
Remember that if you’ve owned crypto for over a year, you don’t need to include these tax-free gains on your tax return.

Crypto

'Wild west of finance': Why are there cryptocurrency ATMs?

Published

5 hours ago

January 17, 2025

Press Room

'Wild west of finance': Why are there cryptocurrency ATMs?

The Canberra region has about 39 cryptocurrency ATMS, but for locals who haven’t engaged with digital currency before their presence can be confusing.

Cryptocurrencies, or cryptos, are digital tokens that allow people to make payments directly to each other through an online system.

The ATMS were created as an alternative payment method to remove the middleman of banks through a de-centralised system.

When transferring crypto, thousands of computers worldwide verify the transfer, instead of one bank.

Bought and sold on digital marketplaces called exchanges, cryptocurrencies don’t have any intrinsic monetary value — they are worth whatever people are willing to pay for them at the market on a given day.

Currently, Bitcoin is both the most popular crypto and the crypto with the highest monetary value, at about $150,000 per coin.

So if the main purpose of crypto is to be digital, why do crypto ATMs exist, and are they useful?

How do they work?

There is no tangible data on how many Australians are accessing the ATMs, however as of last July, according to YouGov, about 1.3 million NSW residents, 801,000 Victorians, 850,000 Queenslanders, 294,000 South Australians, and 462,000 WA residents said they currently owned crypto.

Award-wining technology journalist and founder of technology publication Pickr, Leigh Stark, told ABC Radio Canberra the primary function of a crypto ATM is to turn real money into digital money, or vice versa.

In order to use a crypto ATM a person must already have a crypto wallet that can generate a QR code.

At a crypto ATM the digital currency can be bought, sold, or both, but Mr Stark said most only offer access to between five and 10 of the major cryptocurrencies — almost always including Bitcoin.

Selling cryptocurrency through a crypto ATM means swapping it for its current market value in cash or with a debit card.

You can also buy cryptocurrency with cash or a debit card at a crypto ATM.

Mr Stark said he didn’t know “if there’s necessarily a need” for cryptocurrency ATMs.

“I can understand why some people might want to take some of their money out of it, so effectively turning a digital coin that only exists on the internet into hard money, that kind of makes some sense to me,” he said.

“But buying crypto through it, I’m not entirely sure I understand that — largely because of the amount of exchanges that exist online.

“I feel like they would be a better approach for actually buying crypto, not even just because of the money transfer, but also because there are a lot more options for what you invest in on an online exchange.”

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Mr Stark warned taking money out from some crypto ATMs was taxable, and it was up to a user to remember and file.

“So the ATMs, effectively, they still have to abide by Australian government regulation regarding how they work,” he said

“But the whole thing about crypto and managing to take your money out of it, it qualifies as part of the capital gains tax.

“Not all crypto ATMs work that way, but if you take your money out, you have to remember what you did as a form of event, and file that information later on.”

Are Canberrans using Bitcoin ATMs?

Mr Stark said because a Bitcoin ATM usually only offered access to a selection of major cryptocurrencies, their usefulness depends on what exchanges a person invests in.

And they don’t all support selling, which is how a person can get money from them.

“Not every Bitcoin ATM works as a form of exchange, that’s for selling currency and they don’t all do that.

“In fact, far fewer support selling than they do buying.”

A Localcoin branded Bitcoin ATM in Canberra. (ABC News: David Sciasci)

Mr Stark said crypto ATMs in the Canberra region typically accepted a maximum of $25,000 in cash, but he suspected the majority of users wouldn’t be carrying that much cash with them.

But he said much smaller amounts were not uncommon.

“I mean the reality is, if you put in 20 bucks, that’s 0.000013 of a single Bitcoin,” he said.

“[But] you absolutely could buy that small amount of crypto, and that’s quite normal.”

Mr Stark said often people begin buying crypto in these very small amounts and then decide whether to buy more depending on whether its value increases.

“Crypto is kind of the wild wild west of finance, depending on what type of coin you get, whether it’s one of the big ones like Bitcoin or one of the small ones like Shiba Inu or Ethereum, or anything like that, you might end up with a small amount that spirals into a big one,” he said.

“You might be one of those success stories, it seems highly unlikely, but you could be just waiting for it to get higher and higher.”

Are they used for scams or crime?

In order to use the financial proceeds of crime, or ‘dirty money’, it first needs to be laundered to hide its illegal origins.

Cryptocurrency offers a sophisticated way to do this by turning it into digital currency.

However, every crypto transaction is recorded on a blockchain — essentially a publicly available, online ledger — so to make the dirty money truly clean, the crypto is then put through a mixer service.

These services mix cryptocurrency together from a number of different users, which obscures the transaction trails and makes it very difficult to trace the original source.

A Localcoin branded sign that reads "Bitcoin ATM here". — Leigh Stark says if someone is asking you to buy them Bitcoin, it’s most likely a scam. (ABC News: David Sciasci)

Mr Stark said it wouldn’t shock him if Bitcoin ATMs were being used for criminal enterprises like money laundering or money mule activities.

“I’ve not seen it, but likewise, I’ve also never seen anyone actively use a Bitcoin ATM before,” he said.

“I’ve never had a reason to, and that’s kind of the point.

“But maybe I’m coming at the wrong times, maybe there are people coming through with $25,000 at 1am and I just have no idea.”

As for using them in scams, Mr Stark said that was less about the ATMs and more about cryptocurrency as a whole.

He said if someone is asking you to get Bitcoin for them “it’s probably a scam”.

“There are a lot of different scams out there, and Australians lose billions every year, but yes, if somebody has asked you to buy them crypto or said that you need to give them crypto in order to get something in return, it’s very likely a scam,” Mr Stark said.

“Some of the Bitcoin ATMs have been used for things like that, and so now the Australian government is effectively trying to track and work out how those actually work in relation.”

Crypto

Trump to designate cryptocurrency as a national priority

Published

13 hours ago

January 17, 2025

Press Room

Trump to designate cryptocurrency as a national priority

As President-elect Donald Trump begins a second term on Monday, he plans to issue an executive order making cryptocurrency a national priority, Bloomberg reports.

The order is meant to guide government agencies to work with the industry and possibly pause crypto-related litigation, according to Bloomberg, which cited unnamed people familiar with the matter. Trump also plans to create a crypto advisory council to advocate for the industry’s policies, per Bloomberg, and has suggested creating a national bitcoin stockpile.

This would mark a new era for crypto, an industry that collapsed two years ago after prices crashed. The period was marked by the fall of FTX, a leading exchange that went bankrupt that year. Its founder, Sam Bankman-Fried, was convicted of defrauding customers and sentenced to 25 years in prison.

The industry resurged in 2024, boosted by Trump, a former skeptic who pledged to turn the U.S. into the crypto capital of the world. Eager for a clear governing framework and a friendlier watchdog, donors poured tens of millions of dollars into pro-crypto candidates’ campaigns.

Dogecoin, a cryptocurrency with a dog mascot and billionaire Elon Musk as a fan, surged in value after Trump won and announced a non-governmental cost-cutting group nicknamed DOGE.

Trump then nominated crypto ally Paul Atkins to lead the Securities and Exchange Commission, the federal agency that led a crackdown under the Biden administration. Bitcoin surged to $100,000 for the first time following the announcement. “CONGRATULATIONS BITCOINERS!!! $100,000!!!” Trump wrote on Truth Social. “YOU’RE WELCOME!!!”

Crypto companies and investing platforms like Coinbase, Robinhood, Kraken and Ondo Finance Inc. have made $1 million donations to his inauguration. Ripple plans to donate $5 million in the form of its own digital token, and the industry is holding an “Inaugural Crypto Ball” to support Trump, Bloomberg reports.

Trump’s business interests include World Liberty Financial, a crypto platform he and his sons launched last year with Steve Witkoff, a friend and inaugural committee co-chair who has been named special Middle East envoy. The Trumps are not employees of the business but promote it, and an entity affiliated with Trump, DT Marks DEFI LLC, is entitled to receive 75% of the revenues.

In mid-November, the Financial Times reported that Trump Media — the parent company of Trump’s social media platform, Truth Social — was in talks to buy Bakkt, a crypto trading firm previously led by Kelly Loeffler, another co-chair of his inaugural committee.

Trump’s 2024 financial disclosures show he owned as much as $5 million worth of the crypto token ethereum, a crypto token that has surged in value since the election, according to The New York Times.

about cryptocurrency

Crypto

Donald Trump plans to make cryptocurrency a national priority: Report

Published

20 hours ago

January 17, 2025

Press Room

Donald Trump plans to make cryptocurrency a national priority: Report

Donald Trump, who is going to take office as the 47th US President on January 20, is planning to issue an executive order that will elevate cryptocurrency to a national priority in the United States, reported Bloomberg.

The move is expected to signal a policy shift and provide the crypto industry with a more prominent role in shaping government decisions.

According to sources mentioned in the report, the order will designate cryptocurrency as a national imperative, encouraging government agencies to collaborate with the industry. Additionally, it is likely to establish a cryptocurrency advisory council to advocate for the sector’s policy needs.

Bitcoin was trading at $101,021.39, with a market cap of $2 trillion at the time the article was being written.

CRYPTO INDUSTRY’S INFLUENCE

Donald Trump has received considerable support from the cryptocurrency industry, including donations from prominent companies such as Coinbase and Ripple to his inaugural committee. On Friday, just days before the beginning of his second term at the White House, the industry is set to host an “Inaugural Crypto Ball” in Washington, celebrating its ties with the incoming administration.

This initiative would represent a huge shift for the crypto sector, which has faced numerous regulatory challenges under President Joe Biden’s administration. Federal agencies, including the Securities and Exchange Commission (SEC), have launched more than 100 enforcement actions against crypto companies in recent years.

The proposed executive order may include a directive requiring all government agencies to review their policies on digital assets. There is also discussion about pausing ongoing litigation involving cryptocurrency firms, sources told Bloomberg. This could potentially halt legal actions against major players such as Binance Holdings Ltd. and Ripple Labs Inc., a move seen as a top priority by the industry.

CREATION OF NATIONAL BITCOIN STOCKPILE

Another key aspect under consideration is the creation of a national Bitcoin stockpile, the report mentioned.

The US government currently holds nearly $20 billion worth of Bitcoin, confiscated during various investigations, according to analytics firm Arkham. Bitcoin’s price has surged by nearly 50% since the November election, reaching over $100,000, partly due to speculation about the potential stockpile.

The proposed stockpile would formalise the government’s holdings of Bitcoin and reflect a strategic shift in how the US approaches cryptocurrency. Bitcoin has seen remarkable growth in 2024, with its value more than doubling over the year.

Kara Calvert, Vice President for US Policy at Coinbase Global Inc., commented on the importance of Trump’s potential move.

“What I think Donald Trump is going to do is signal that the United States is back and we are ready to lead in this industry. What it’s signaling to other countries is be careful, or you won’t keep up,” she told Bloomberg.

Trump has also made bold promises during his campaign, vowing to transform the US into the global capital of cryptocurrency. His administration is expected to issue several executive orders covering various industries within his first few days in office.

Despite facing regulatory hurdles during the Biden administration, the cryptocurrency industry in the US has continued to grow. Prominent financial firms, including BlackRock Inc., have launched spot Bitcoin and Ether exchange-traded funds (ETFs).

Published On:

Jan 17, 2025

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