Given the growing popularity of cryptocurrencies in Europe, Germany is developing regulations to support and protect investors.
Cryptocurrency Regulation in Germany
On March 6, 2025, the Federal Ministry of Finance (BMF) published an updated circular on the tax treatment of crypto assets.
Key changes include: - The term “virtual currencies and other tokens” is replaced with “crypto assets.” - Differentiation between active and passive staking for tax purposes. - Tax implications for decentralized finance (DeFi) are addressed for the first time. - New requirements for transaction overviews and tax reporting. - Clearer guidelines for valuing crypto assets, including the use of daily market rates. - Emphasis on documentation and retention obligations for taxpayers. - Transitional rules apply for tax years up to and including 2024 to help taxpayers adapt.
What is the German Government Saying About Cryptocurrency?
The Free Democratic Party of Germany explicitly called for the creation of a Strategic Bitcoin Reserve in the country. However, it is not regulated yet.
Additionally, the Federal Financial Supervisory Authority (BaFin) regulates the crypto market, overseeing: - Licensing and enforcement of AML and CFT rules. - Blockchain-based lending through the German Banking Act. - Prohibition of any illicit activity in the crypto space.
Crypto Tax in Germany
Crypto asset taxation in Germany includes: - **Capital gains tax:** Cryptocurrencies are categorized as ‘private economic goods’, hence capital gains tax does not apply. - **Income tax:** The income tax rate ranges from 0% to 45%, depending on total income. - **Tax exemptions:** Gains from crypto trading are tax-exempt up to €1,000 per year. Income from staking and mining is free up to €256 per year. - **Reporting deadlines:** The deadline for the 2024 tax return is July 31, 2025; if prepared by tax advisors, it extends to April 30, 2026.
Crypto trading and holding are legal in Germany, with regulations in place to govern the crypto sector. The focus remains on investor protection and financial stability, positioning Germany as one of the most crypto-friendly countries in the European Union.
