In this article, I will discuss crypto taxes in Germany, focusing on how cryptocurrencies are taxed and the key regulations that apply.
From short-term capital gains to income from activities like mining and staking, understanding these tax rules is crucial for anyone involved in the crypto space in Germany. Let’s break down what you need to know.
How Is Crypto Taxed In Germany?
Cryptocurrency is categorized as a private asset in Germany, thereby classifying it as income which is taxed rather than property subjected to capital gains tax. If you sell, swap, or spend crypto within a year of acquisition, you will incur an income tax obligation on the profit made.
However, as of 2024, if your net gain is less than €1,000 then you are not liable to file tax returns. If you hold the crypto for over a year, then selling it does not incur any form of tax.
Any profits from staking or mining but exceeds 256 euros annually is also tax liable. With an understanding of these rules, one can comply with Germany crypto tax regulations and lessen the amount of taxes owed.
German Income Tax Rate
When it comes to short-term profits from crypto trading, these become part of your taxable income and will be taxed on the relevant income tax rate.
On top of the income tax, there is a solidarity tax (known as “Soli”) which is an additional tax calculated on a percentage basis of all income tax paid.
| Income Range | Single Taxpayer | Married Taxpayer | Tax Rate |
|---|---|---|---|
| €0 – €10,908 | €0 | €0 | 0% |
| €10,908 – €62,809 | €10,908 – €62,809 | €21,816 – €125,618 | 14% to 42% |
| €62,809 – €277,825 | €62,809 – €277,825 | €125,618 – €555,650 | 42% |
| Above €277,825 | Above €277,825 | Above €555,650 | 45% |
Crypto Losses In Germany
No losses squandered on selling, swapping, or spending crypto and other virtual digital assets is subject to the tax in Germany. In any case, you must monitor those losses. In case you make profits, the losses may be useful to reduce the taxable income.
If in the current year there are no profits to counterbalance losses, one is entitled to carry losses into the following years in Germany. In order to offset future gains, losses must be declared in a tax return.
Thus, while no taxes are levied on crypto losses, monitoring and declaring losses is an effective way of reducing tax liabilities.
Do you pay cryptocurrency taxes in Germany?
Yes, crypto is taxed in Germany with the BSZt declaring them as short-term capital gains subjected to the Income Tax if held for less than one year. This further includes profit from selling, swapping, or spending currency.
Furthermore, income derived from other activities in cryptocurrency such as mining and staking rewards is also taxed under Income Tax.
However, Should your annual ne net gains go under 1k euros which is set in 2024, you would not have to file a tax declaration. Knowing the rules is important to ensure the German tax laws are adhered to.
Can The BZSt Track Crypto?
Yes, the BZSt can track cryptocurrencies. If you hold an account with a European digital currency exchange, then your data is likely already with the BZSt. This has been made possible because of the EU’s Sixth Anti-Money Laundering Directive that went into effect on June 3, 2021.
The Directive standards and policies require companies offering financial services to crypto clients to know their customers on a deeper level.
This is to help mitigate money laundering and other harmful activity by streamlining data transfer among EU member states.
The German Federal Central Tax Office is expected to be able to confirm the possession of cryptocurrencies in 2025 due to the new Dac8 directive. This will enable the German tax office to access the accounts of crypto companies and have more information about crypto’s visibility.
Conclusion
All in all, comprehending crypto taxes in Germany is imperative for meeting compliance. Short-term trading profits, mining, and staking rewards are liable for Income Tax, with specific limits on filing for taxes.
The tax is non-existent for long-term holdings after a period of one year. Staying up to date with emerging regulations can help you evade punishment while managing your cryptocurrency assets throughout Germany’s tax system.
