Germany Crypto-Asset Income Tax Treatment Guidance

The BMF circular defines a crypto-asset as a digital representation of value or a right that can be transferred and stored electronically using distributed ledger technology or similar technology. It uses functional classification rather than a single tax label. Currency or payment tokens, utility tokens, security tokens and hybrid crypto-assets are assessed according to their actual use and rights. The circular does not address income from employment or wage withholding when crypto-assets are provided in an employment relationship.

The 2025 revision updates terminology from “virtual currencies and other tokens” to “crypto-assets” and expands practical material on documentation, tax reports, claiming of crypto-assets, and the use of second-exact or daily prices. The BMF states that NFTs and liquidity mining are not yet within the scope of the circular and may be addressed through future additions.

The circular states that mining and forging constitute an acquisition for income tax purposes. Block rewards and transaction fees are treated together, and the activity may be private or commercial depending on the facts. Crypto-assets received through block creation are valued at market price at the time of acquisition. Passive staking, as described by the BMF, is generally treated as other income from rendering of service under section 22 no. 3 of the Income Tax Act, with received crypto-assets valued at market price at acquisition.

For private assets, the circular states that crypto-assets are “other assets” under section 23 of the Income Tax Act. Profits from sales of crypto-assets held as private assets can fall within private sales transaction rules if acquisition and sale occur within no more than one year. The circular also states that profits remain tax-free where the total profits from all private sales transactions in the calendar year are below €1,000. Repeated buying and selling, including crypto-to-crypto exchanges, may be commercial activity depending on the facts.

The guidance addresses unit-by-unit allocation, average acquisition cost and FIFO methods, with analysis generally applied on a wallet-by-wallet basis. It states that the ten-year holding-period extension under section 23 does not apply to currency or payment tokens. The circular also covers lending, airdrops, hard forks, ICOs, utility tokens and security tokens, generally tying treatment to whether the asset is held privately or as a business asset and to the legal substance of any rights conferred.

The 2025 update is particularly important for record-keeping. The BMF says public blockchain information may be visible but is often pseudonymous, so a public key alone is not sufficient evidence for income tax purposes. Taxpayers’ records, exchange records and tax reports can be relevant to verification. The circular describes transaction overviews, CSV files, screenshots, wallet balances, wallet addresses, transaction hashes, acquisition details, sale details, cost information, market-price sources and documentation of the selected allocation method as examples of information revenue authorities may request.

The BMF published the revised circular on 6 March 2025 after discussions with the highest revenue authorities of the Länder. The 2026 BMF positive list records the 6 March 2025 circular with Federal Tax Gazette citation BStBl I 2025, 658, indicating that it remained part of the active body of BMF guidance in the 2026 list. The English translation is official but non-binding; the German original should be treated as the controlling source for editorial review.