Cryptocurrencies and taxes in Germany

Dear Radixradar Community,

the sharp rise in cryptocurrencies is increasingly leading to rapidly increasing profits and growing wallets. However, the tax aspects must always be considered, otherwise the profits would have to be quickly transferred to the state in large proportions.
In the following I will give you essential information about the taxation of crypto currencies briefly and concisely (! No tax advice here and not conclusive). Always send requests and comments to me. Greetings Robert

The tax calculation

Cryptocurrencies are in accordance with Section 23 of the Income Tax Act (EstG) to be classified as private sales transactions (OVG). It is therefore another economic good. In contrast to the so-called investment income (interest, shares, ETF, etc.), the personal tax rate (marginal tax rate) is relevant for cryptocurrencies and not the normal 25% of the investment income tax.

Calculation of the personal tax rate and marginal tax rate: Link to the calculator
For example, from 57,919 euros / year gross income, every additional euro is taxed at the marginal tax rate of 42 percent.

• Crypto lending / staking – Lend cryptocurrency: see attached video from 12:37 min
• Crypto mining : see attached video from 15:22 min

When do I have to pay taxes?

Profits are generally tax-free after a 1 year holding period. (Example 1)
Profits of up to 600 euros per year are also tax-free ¹ as with gold. (Example 2)
If the exemption limit is exceeded, the total profit is taxed at the personal marginal tax rate. This means that from 601 euros, 601 euros are taxed. (Example 3)

Tip: Document times. When was the cryptocurrency purchased and when it was sold (for inquiries from the tax office).

¹ Attention: do not confuse this with the tax exemption for investment income (e.g. shares) of 801 euros per person – everything from 802 euros is taxed at 25 percent .

Examples

Conclusion and strategy

• Hold cryptocurrencies for more than a year
• If the sale is necessary beforehand, then the profit should not exceed 600 euros
• When it comes to lending and mining, there are special features to consider

Further information

0:00Introduction 1:23 When do I have to pay taxes on Bitcoin as a private person? 2:34 Similar to gold for taxation? 3:00 Where do I have to declare Bitcoin profits in the tax return? 5:29 What is the 10 year period about? 7:55 How do I prove to the tax office that my 1-year period has expired? 8:37 Is there an exemption for Bitcoin? 9:29 Other “other assets” 10:07 Will the tax laws on Bitcoin change? 11:20 Are the tax regulations in Germany attractive? 12:37 Crypto-Lending – lend cryptocurrency 15:22 Taxes on crypto mining 17:37 Can I claim Bitcoin losses for tax purposes? 19:37 Giving away and bequeathing bitcoins 22:27 End