1. Introduction

On 23 December 2025, Federal Law Gazette (Bundesgesetzblatt) No. 352 officially published the Act Implementing Directive (EU) 2023/2226 (Gesetz zur Umsetzung der Richtlinie (EU) 2023/2226), signaling a further clarification of Germany’s regulatory blueprint for crypto-assets.

As Germany’s domestic transposition and implementation measure for the EU DAC8 Directive, the Act introduces the Crypto-Asset Tax Transparency Act (Kryptowerte-Steuertransparenz-Gesetz, “KStTG”). The KStTG establishes (i) reporting obligations for crypto-asset service providers and (ii) an institutional framework for the automatic exchange of information with tax authorities. In addition, the Act makes corresponding amendments to multiple existing statutes to align reporting, information exchange, procedural, and administrative rules into a coherent compliance architecture. The Act enters into force on the day following its promulgation. Crypto-asset service providers are required to treat 2026 as the first reporting period and to submit the relevant information to the competent authority by the statutory deadline of 31 July 2027.

Historically, Germany has adopted a comparatively pragmatic approach to crypto-asset governance: it preserves room for technological innovation and market development, while simultaneously strengthening institutional constraints through financial regulation, anti-money laundering (AML) requirements, and tax transparency mechanisms. With DAC8 now fully transposed into German law and the first reporting period commencing, crypto-asset activities will be incorporated more systematically into a data ecosystem that tax authorities can access, verify, and exchange.

Against this backdrop, this article first provides an overview of Germany’s current regulatory landscape and the allocation of responsibilities among competent authorities, with a focus on key rules and their implications for crypto-asset service providers. It then turns to the tax dimension, describing how crypto transactions and on-chain activities are taxed under Germany’s existing tax framework, with particular emphasis on the identification of taxable events, the determination of cost basis and income calculation methodologies, and the underlying logic governing the applicable tax rates and their attribution.

2. Overview of Germany’s Crypto Regulatory Architecture

Germany’s crypto regulatory regime is not administered by a single dedicated authority. Instead, it operates through a coordinated division of responsibilities across multiple agencies:

On the financial regulatory side, the Federal Financial Supervisory Authority (BaFin) plays a central role. Within the framework of the EU Markets in Crypto-Assets Regulation (MiCAR), BaFin is responsible for implementing market-entry and ongoing compliance requirements for crypto-asset services, and it has issued a number of guidance documents to further specify service categories, licensing obligations, and the boundaries of applicable exemptions. At the same time, even prior to MiCAR, Germany had already brought certain crypto-related activities within the scope of its traditional financial regulatory regime—for example, by defining the regulatory characterization of crypto custody and imposing corresponding supervisory requirements.

On the anti-money laundering (AML) side, Germany relies on the Anti-Money Laundering Act (Geldwäschegesetz, GwG) as the legal foundation for incorporating relevant entities into the AML obliged-entity framework, with the Financial Intelligence Unit (FIU) responsible for receiving and processing suspicious transaction reports (STRs).

On the tax transparency side, the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) is responsible for managing registration and the reporting gateway. Under the institutional arrangements established by the Crypto-Asset Tax Transparency Act (KStTG), the BZSt drives service providers through a compliance chain comprising registration, due diligence, annual reporting, and subsequent automatic exchange of information.

At the level of legal architecture, Germany has not relied on a single standalone “crypto law” to govern the sector. Rather, it has built an overlay structure in which directly applicable EU rules are complemented by German domestic legislation:

On the one hand, MiCAR provides a harmonized set of market rules across the EU, serving as the primary anchor for German supervisory practice. On the other hand, Germany addresses the risk governance of crypto-related business activities through its existing financial law and AML framework. In the field of tax cooperation, Germany has used its DAC8 implementing legislation as the key instrument: it enacted the KStTG and introduced corresponding amendments to related statutes to ensure domestic legal alignment.

Through unified interpretative documents issued by the Federal Ministry of Finance, German tax authorities have translated common crypto-asset transactions, on-chain activities, and taxpayers’ record-keeping obligations into operationally actionable audit and enforcement pathways. In parallel, the service-provider reporting and automatic exchange mechanism established under the KStTG enhances the availability and verifiability of information for tax authorities through institutionalized data collection and cross-jurisdictional exchange.

3. Germany’s Crypto Tax Regime

On 6 March 2025, the German Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) issued guidance on the taxation of crypto-assets, providing a detailed interpretation of Germany’s crypto tax treatment. Prior to this, FinTax had already conducted a high-level review of Germany’s crypto tax regime. Building on that foundation, this section focuses on the more granular rules and positions reflected in the BMF guidance.

3.1 Classification of Assets and Types of Income

From a tax characterization perspective, the BMF clarifies that an individual crypto-asset constitutes an “economic asset” (Wirtschaftsgut) for German tax purposes, supported by a market price basis that allows independent valuation. Accordingly, crypto-related activities are not governed by a standalone tax system; instead, they are integrated into Germany’s existing income tax framework. Activities involving crypto-assets may give rise to different categories of income under Section 2(1) of the German Income Tax Act (Einkommensteuergesetz, EStG), including: income from business operations (Section 15 EStG), income from capital assets (Section 20 EStG), income from private disposal transactions (as addressed under Section 22(2) in conjunction with Section 23 EStG), or other income (Section 22(3) EStG). Each category must be assessed based on the facts and circumstances.

· Income from business operations (commercial income)
This category applies to activities exhibiting a sustained profit intention, repetition, and meaningful participation in economic life—for example, professional mining businesses, operation of trading platforms, or large-scale staking pools. The tax base is net profit (income less deductible expenses), and the applicable rate follows the progressive personal income tax scale (approximately 0% to 45% for tax years 2025/2026, plus a 5.5% solidarity surcharge). Where the activity is conducted by a corporate entity, corporate income tax at 15% and municipal trade tax (typically about 14–17%) may additionally apply.

· Income from capital assets
This category is less commonly applicable to mainstream crypto activities, but may be relevant in cases such as dividends or interest associated with security tokens, and in certain futures or leveraged trading contexts. The tax rate is a 25% flat withholding tax (Abgeltungsteuer) plus a 5.5% solidarity surcharge (effective rate approximately 26.375%), and holding-period-based exemptions generally do not apply.

· Income from private disposal transactions
This category applies to short-term speculative disposals of crypto-assets held as private assets. The tax base is the disposal gain (sale proceeds minus acquisition costs and related expenses), taxed at progressive personal income tax rates. A full exemption applies if the holding period exceeds one year. An additional exemption applies where total annual gains are below EUR 1,000 (adjusted from 2024; previously EUR 600).

· Other income
This category covers items such as passive staking rewards, airdrop consideration, and lending interest that do not qualify as business income or capital income. The tax base is generally the fair market value at the time of receipt, taxed at progressive personal income tax rates. An exemption may apply where the annual total is below EUR 256.

3.2 Tax Trigger Events

In practice, crypto-related activities take many forms. Their tax treatment in Germany requires a clear distinction between assets held as private assets and those held as business assets, as different transaction types can lead to materially different tax obligations:

· Personal trading of crypto-assets (buy/sell)
For private assets, disposals with a holding period of less than one year are generally treated as gains from private disposal transactions and taxed at progressive personal income tax rates (approximately 0–42%). Disposals after a holding period of more than one year are exempt, and an additional exemption applies where annual gains are below EUR 1,000.
For business assets, gains are generally treated as business income, no holding-period exemption applies, and taxation follows the relevant business income rules (typically progressive rates for individuals carrying on a business).

· Mining
For private assets, occasional or non-commercial mining activities are generally treated as other income, with an exemption where the annual total is below EUR 256.
For business assets, block rewards and transaction fees are treated as business income, typically taxed on the basis of fair market value at receipt, less deductible costs, under the net-profit principle.

· Passive staking
For private assets, staking rewards are generally classified as other income and taxed based on the fair market value at the time of receipt.
For business assets, staking rewards are included in business income.

· Lending
For private assets, lending-related proceeds are generally treated as other income.
For business assets, interest income is included in business income.

· Airdrops
For private assets, airdrops received without consideration are typically not taxed upon receipt, and taxation is generally triggered upon subsequent disposal. Where an airdrop is received in exchange for consideration (e.g., a required service or performance), it is generally treated as other income.
For business assets, where the airdrop is connected to the taxpayer’s business activity, the proceeds are generally included in business income.

· Other transactions
For transactions such as initial coin offerings (ICOs) and similar events: where the assets are business assets, fundraising proceeds or token sale income are generally treated as business income. Where the assets are private assets, the transaction is generally analyzed as a disposal, with the holding period determining whether an exemption applies.
Leveraged trading is treated separately in certain cases and is typically classified under income from capital assets, subject to a 25% flat tax rate (plus solidarity surcharge), with no holding-period-based exemption.

3.3 Methods for Calculating Cost, Deductible Expenses, and Taxable Amounts

With respect to income and gain determination, the BMF guidance letter (BMF-Schreiben) requires valuation based on fair market value (FMV) in euros, determined using reliable price sources (e.g., CoinMarketCap daily average prices, Kraken quotations) at the relevant point in time. Under the BMF’s no-objection approach, the use of daily average prices for valuation is explicitly accepted. The principal computational rules are summarized below:

· Timing of income recognition
The general test for recognition is whether the reward or consideration has been allocated and is at the taxpayer’s disposal.

o For block creation rewards (e.g., mining or forging/minting), income is typically recognized once the block is confirmed and the related rewards are available for disposal.

o For disposals such as sales or exchanges, the disposal time is generally determined by the on-chain confirmation time of the transaction.

o For receipt-type proceeds such as staking, lending, and airdrops, the relevant time is when the reward is allocated and becomes available for disposal.

o In the event of a fork, the value of newly created assets is typically determined by reference to their FMV at the time of the fork, which then serves as a key benchmark for subsequent measurement and cost allocation.

· Holding-period calculation
The holding period is calculated precisely on a calendar-day basis, starting from the acquisition date and ending on the disposal date. “Acquisition” includes purchase, receipt, reward allocation, and the formation of new assets through a fork. Where a disposal occurs after more than one year from acquisition, it generally falls outside the scope of taxation for private disposal transactions. Staking or lending, in itself, does not reset the holding period of the underlying asset; however, rewards generated through such activities constitute newly acquired assets, for which the holding period restarts on the reward allocation date.

· Cost basis
Cost basis is generally determined by the FMV at the time of acquisition. In situations where acquisition consideration cannot be reasonably determined—such as certain forks or airdrops received without consideration—a zero-euro cost basis may be applied in practice.
For record-keeping and computational simplification, the first-in, first-out (FIFO) method may be used as the standard consumption assumption: the earliest acquired units are deemed to be disposed of first, and taxable gain is calculated as sale proceeds minus cost basis minus related disposal expenses. In addition to FIFO, taxpayers may adopt last-in, first-out (LIFO), highest-in, first-out (HIFO), or an average-cost method, provided there is sufficient justification and consistent application. In practice, this typically requires consistent use within the same wallet or inventory pool until fully disposed, and the ability to provide verifiable evidence of cost and asset flows—e.g., via UTXO tracing or an account-based balance model.

· Deductible expenses
The scope of deductible expenses differs materially between business and private contexts:

o Where crypto-assets are treated as business assets, taxpayers may generally deduct necessary expenses directly connected with earning income, including electricity costs, hardware depreciation (using either straight-line or declining-balance methods), software costs, and other operating expenditures.

o Where crypto-assets are treated as private assets, deductions are generally limited to expenses directly attributable to a specific disposal, such as on-chain gas fees and platform transaction fees. Indirect costs that are commingled with personal living expenses or cannot be directly allocated are typically not deductible.

· Inventory tracing and loss treatment
For inventory tracing, UTXO-based assets such as Bitcoin are typically traced through the input–output chain of unspent transaction outputs, whereas account-based assets such as Ethereum are commonly reconstructed using an accounting model based on cumulative balance movements.
For loss treatment, losses may generally be used to offset taxable income of the same category, and may be carried forward subject to applicable rules and limitations.

3.4 Potential Tax Planning Approaches

Under Section 23(1) EStG, individuals who hold crypto-assets for more than one year before disposal can generally achieve a tax-exempt sale within the framework of private disposal transactions. In addition, where the total annual gains from private disposal transactions do not exceed EUR 1,000, the relevant de minimis exemption may apply. For “receipt-type” crypto income—such as proceeds from staking or lending—if such income is classified as other income, a further small-amount exemption typically applies where the annual total does not exceed EUR 256.

From a computational perspective, the determination of acquisition cost is particularly critical, especially where assets have been accumulated through multiple purchases at different times and prices. In practice, commonly used cost matching approaches include first-in, first-out (FIFO). German official practice also tends to favor FIFO as a simplified method that is easier to verify. That said, provided that the requirements of consistency and traceability are met, alternative methods are not necessarily excluded. Selecting an appropriate cost basis method and applying it consistently can help measure gains and losses more accurately and, within the boundaries of the applicable legal rules, optimize the overall tax burden.

Where more advanced strategies are involved—such as loss offsets, loss carryforwards, or more complex tax loss harvesting arrangements—professional assessment is typically required, taking into account the taxpayer’s transaction structure and local audit practice. This is particularly important to mitigate the risk of disputes arising from method selection or insufficient supporting documentation and audit trails.

4. Conclusion

Overall, Germany is integrating crypto-asset activities into its existing regulatory and tax governance framework in a more systematic manner. Financial regulation and anti-money laundering requirements remain the foundational constraints. At the same time, with DAC8 transposed into German law and the first reporting period commencing, tax transparency tools will materially enhance tax authorities’ ability to access and verify crypto-asset-related information.

For crypto-asset service providers, compliance obligations will increasingly crystallize around the ongoing operation of mechanisms such as registration, due diligence, annual reporting, and automatic exchange of information. For market participants, the tax enforcement environment is likewise expected to become clearer as the underlying data infrastructure strengthens and reporting-based visibility expands.