How to Report Crypto Income in Germany: A Complete 2024 Tax Guide

Understanding Crypto Taxation in Germany

Germany treats cryptocurrencies as private assets (Privatvermögen), not legal tender. This means profits from crypto sales are subject to capital gains tax (Kapitalertragsteuer) under specific conditions. The key factor? Holding period. Sell an asset within 12 months of acquisition, and gains are taxable. Hold for over a year? Your profit is completely tax-free. This unique approach makes Germany one of Europe’s most crypto-friendly tax regimes—if you follow the rules.

When Must You Report Crypto Income?

Taxable events extend beyond simple selling. Report these crypto activities:

• Selling crypto for fiat currency (e.g., Bitcoin to EUR)
• Trading between cryptocurrencies (e.g., ETH to SOL)
• Earning staking or lending rewards (treated as miscellaneous income)
• Receiving airdrops or forks (taxable at market value upon receipt)
• Crypto mining income (taxed as business income if professional)

Note: Purchases, transfers between your own wallets, and holding crypto long-term trigger no tax.

Calculating Your Crypto Gains Correctly

Germany mandates the FIFO (First-In-First-Out) method for cost basis calculation. Your oldest acquired coins are considered sold first. Use this formula:

Gain = Selling Price – (Purchase Price + Transaction Fees)

Example: You bought 1 BTC for €40,000 in January 2023 and another for €45,000 in March 2023. Selling 1 BTC in June 2023 for €50,000 uses the January cost basis: €50,000 – €40,000 = €10,000 taxable gain.

Step-by-Step Guide to Reporting Crypto Taxes

1. Gather Records: Compile all transaction history (buys, sells, trades) from exchanges and wallets. Use crypto tax software like CoinTracking or Accointing for accuracy.
2. Calculate Gains/Losses: Apply FIFO to determine profits per transaction. Remember: Losses offset gains in the same year.
3. Complete Tax Form Anlage SO: Report total gains under “Sonstige Einkünfte” (other income) in Section 44. Include:
   • Date of acquisition and sale
   • Asset type and amount
   • Acquisition and sales value in EUR
4. Submit with Annual Return: File Anlage SO alongside your Einkommensteuererklärung (income tax return) by July 31st of the following year (or later with a tax advisor).

Critical Mistakes to Avoid

• Ignoring small transactions: Every trade or sale under 1 year is taxable, regardless of amount.
• Miscalculating holding periods: The 365-day clock starts at acquisition—track precisely.
• Overlooking DeFi activities: Staking rewards and liquidity mining are taxable upon receipt.
• Missing deadlines: Late filings risk penalties up to 10% of owed tax plus interest.
• Forgetting loss harvesting: Unrealized losses can’t be claimed; sell depreciated assets to offset gains.

Frequently Asked Questions (FAQ)

Is cryptocurrency taxed in Germany?

Yes. Short-term capital gains (assets sold within 12 months) are taxed at your personal income tax rate + solidarity surcharge (up to 45.575%). Long-term holdings (>1 year) are tax-exempt.

Do I pay taxes on crypto-to-crypto trades?

Absolutely. Trading BTC for ETH is a taxable event if done within a year of acquiring either asset. Gains are calculated based on EUR value at trade execution.

How are staking rewards taxed?

Rewards are taxed as “other income” (sonstige Einkünfte) at their market value when received. If you later sell the rewards, capital gains tax applies separately.

What if I use a foreign exchange?

German residents must report worldwide income. Foreign exchange activity follows the same rules—provide transaction records in EUR. Use exchange rates from the European Central Bank (ECB) for conversions.

Can the tax office track my crypto?

Yes. Since 2020, German exchanges must report user data to authorities under AML laws. Non-compliance risks audits, fines (up to €50,000), or criminal charges for tax evasion.

Pro Tip: Consult a Steuerberater (tax advisor) specializing in crypto for complex cases like mining operations or DeFi activities. Keep records for 10 years.