Cryptocurrencies such as Bitcoin and Ether, as well as other crypto assets, have gained significant prominence in recent years and present new tax challenges for both private investors and entrepreneurs. The tax treatment of cryptocurrencies is complex and subject to constant adjustments by legislation, tax authorities, and an ever-expanding body of case law. The taxation of cryptocurrencies can apply to many different scenarios: income from trading, mining, staking, or lending of crypto assets, as well as income from the extensive DeFi sector, may be subject to taxation and require careful documentation and sound tax classification.
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Cryptocurrencies such as Bitcoin, Ether, and other tokens present private investors and businesses with complex tax issues. Their tax treatment is subject to ongoing changes driven by legislation, tax authorities, and case law. Taxable income may arise from activities such as trading, mining, staking, lending, and DeFi-related transactions, and requires careful documentation. We advise on the tax classification of crypto transactions and assist with reporting and disclosure in tax returns. In addition, we provide support for year-end closing issues, notices of correction, and obligations to cooperate with tax authorities. We assist with crypto reports, proofs of origin, and reporting obligations, and represent you during audits if necessary. We also stand by your side in the context of criminal tax law regarding the treatment of crypto assets under sales and income tax laws for both personal and business assets.
We assist you with the tax classification of your crypto-related matters and provide clarity on complex issues.
We assist you in preparing crypto reports as well as transaction and proof-of-origin documentation for tax purposes.
We are also here to support you during audits by tax authorities and in matters of criminal tax law.
The misconception that cryptocurrencies are anonymous persists. In reality, the vast majority of transactions are merely pseudonymous, not anonymous. It is therefore generally possible for tax authorities to trace crypto transactions using the public key from the blockchain.
pseudonymization merely means that the identity of the person actually behind the respective public key is not immediately revealed to tax authorities.
Global efforts to transparently map transactions by analyzing a digital “footprint” are immense.
Since January 1, 2026, tax authorities in Germany and the EU have had comprehensive access to information on crypto transactions through the implementation of the DAC8 Directive and the Crypto Asset Tax Transparency Act (KStTG). Crypto service providers (e.g., exchanges, wallet providers, trading platforms) are required to report detailed transaction data on their users. This applies to both EU-based and foreign providers, provided they offer services to taxpayers in Germany.
The following information must be reported, among other things:
Reports are submitted automatically and exchanged between the respective tax authorities. The OECD standard CARF (Crypto-Asset Reporting Framework) also provides for the international exchange of this data, thereby including third countries.
The pseudonymization of crypto transactions is significantly restricted by DAC8, KStTG, and CARF. Since 2026, tax authorities have been able to systematically access transaction data, provided it passes through intermediaries subject to reporting requirements.
The decisive factor is whether the activity meets the characteristics of a commercial enterprise:
Typical commercial activities involving cryptocurrencies:
The decisive factors are an overall assessment of the circumstances and prevailing market opinion. Additionally, a distinction must be made in accordance with the principles of securities trading and private asset management.
In order to substantiate tax information regarding crypto income, a wide range of supporting documents must be provided, and the obligations to cooperate under Section 90 of the German Fiscal Code (AO) must be fulfilled. Complete, plausible, and verifiable documentation is required (e.g., tax reports, transaction overviews, proof of the source of funds, and, where applicable, procedural documentation). We would be happy to assist you with the preparation and organization of these documents.
The one-year capital gains period under Section 23 of the German Income Tax Act (EStG) may result in a realized gain from the sale of a cryptocurrency held as part of private assets being received tax-free after the period expires. However, this applies only to certain scenarios involving private assets—particularly in the context of trading. It is less well known that crypto income generated in other ways (e.g., staking, lending, mining, DeFi instruments, and many others) does not constitute income from a private sale transaction and is therefore not subject to the one-year capital gains period. The Federal Ministry of Finance (BMF) has issued a restrictive statement in its updated application decree dated March 6, 2025: From the perspective of the tax authorities, only so-called currency and payment tokens will be classified as private sales transactions in the future (provided the requirements are met). Conversely, utility tokens, security tokens, and possible hybrid forms may require an individual tax review to determine the respective type of income. In practice, the legal structure of tokens is often not easily distinguishable, which can increase legal uncertainty and the potential for conflict with tax authorities. Furthermore, the taxation of crypto assets varies from country to country and is regulated on a highly individual basis, which is why a step-by-step review is often necessary until the tax basis is finally determined.
We assist you in preparing crypto reports—including supplementary data forensics where necessary—as well as in creating and preparing proofs of origin and fulfilling reporting requirements. The goal is to provide complete, plausible, and transparent documentation to meet tax reporting and cooperation obligations.
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