– Update:
Good to know
- If you keep Bitcoin and other Crypto in your possession for more than a year without trading with them, no taxes are due on their profits
Content
- Who Must Pay Bitcoin and Crypto Tax in Germany
- How to Avoid Bitcoin and Crypto Tax
- Real-time Bitcoin Price
- Crypto Taxes in Germany FAQ
Who Must Pay Bitcoin and Crypto Tax in Germany
Anyone who does not keep Bitcoin and other Cryptocurrencies in his/her portfolio for at least one year after purchase must pay tax. However, this does not apply if the profit is up to 1,000 euros. In this case, no tax is payable. This rule applies to all cryptocurrencies, not just Bitcoin.
In plain language, this means that if there is less than a year between the purchase and sale of Bitcoin, the sale is a case for the tax return (Judgment of February 14, 2023, Ref. IX R 3/22). Info about the legal requirements for private sales transactions are here: Section 23 Paragraph 1 Sentence 1 No. 2 EStG.
Not only the sale of the Bitcoin within the one-year period can trigger the taxation, but also the purchase of goods with Bitcoin.
How to Avoid Bitcoin and Crypto Tax
If you keep cryptocurrencies in your possession for more than a year without trading with them, no taxes are due on their profits. However, there may be no “intermediate economic use” of the currency during this time, for example by lending it out. The exchange into another cryptocurrency or a fiat currency within the holding period would also be subject to tax. For your information, fiat currencies are classic money such as dollars, Euros, and other currencies.
If someone steals your Bitcoin, don’t count on the tax authorities to accept a tax loss for you, as they have done this for anyone never before. The reason is that theft does not constitute a sales transaction under the law (Section 23 Paragraph 1 Sentence 1 No. 2 EStG).
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An example of when you must pay tax after selling a Bitcoin following soon!
Don’t worry, you won’t pay your tax immediately. You will prepare your annual tax return, and wait for the response from tax authorities. Then you will pay your tax.
An example of when you don’t need to pay tax after selling a Bitcoin following soon!
Crypto Taxes in Germany FAQ
1 Is Cryptocurrency Legal in Germany?
Yes, crypto is legal in Germany. Germany treats Bitcoin and other cryptocurrencies as private money for tax purposes.
2 When Will You Pay Tax on Crypto in Germany?
For German taxpayers, short-term crypto gains are subject to regular income taxes. Long-term crypto gains on crypto held for over a year are tax-free.
The German tax filing deadline is the 31st of July of the year following the tax (calendar) year. The filing deadline expires on the final day of February of the second year if a certified tax adviser prepares it.
3 What Happens if I Forget to File My Cryptocurrency Taxes in Germany?
If you fail to meet the German tax filing deadline, you’ll be subject to a penalty (minimum of 25 € per month for each month you are late).
4 Where the German Cryptocurrency Regulation Can be Found?
Germany’s crypto tax is overseen by Federal Central Tax Office (Bundeszentralamt für Steuern or BZSt). This is a German Federal Ministry of Finance branch.
Must-Read Info
You can find further interesting information in the articles Bitcoin Price Calculator and Buying and Selling Cryptocurrencies.