Tax law and crypto assets

In the area of digital assets, tax risks usually do not arise by chance or because of a „legal vacuum“, but as a result of inaccurate tax valuations, incomplete documentation or belated use of expert advice. 

The economic impact is therefore often delayed – for example in the context of tax audits or when processing complex transaction histories for tax purposes.

Whether in the forward-looking structuring phase or in existing conflict situations, expert support is crucial in order to secure economic scope. 

Due to the complexity of crypto matters, an isolated tax view is usually not sufficient; specialized legal support with an interdisciplinary understanding is required. 

We advise private individuals, entrepreneurs and investors on all tax law issues with a particular focus on crypto assets. We combine tax analysis with regulatory and civil law classification.

Our activities cover the following areas in particular:

Tax classification of crypto assets

The tax treatment of digital assets depends largely on the legal and economic classification of the respective crypto asset. In particular, the type of token and its specific design and use must be taken into account. 

In practice, especially since the BMF letter dated March 06, 2025 A distinction is often made between four categories of tokens:

Currency tokens (e.g. Bitcoin, Ether), which primarily serve as a means of exchange or payment within a network,

Utility tokens, wich enable access to certain digital applications or services within a network,

Security tokens, which may be economically similar to an investment or security, as the token represents an investment/shareholding, and

Non-Fungible Tokens (NFTs), which, due to their uniqueness, often represent individual digital assets.

Depending on the classification, different tax regulations may apply, for example in connection with private sales transactions in accordance with § 23 EStG.

The specific tax situation always depends on the circumstances of the individual case. In particular, the time of acquisition, the valuation based on available market prices, the allocation to private or business assets and the specific use of the respective crypto asset are decisive.

An early tax analysis helps to document transactions in a comprehensible manner and avoid subsequent tax risks - such as subsequent assessments or disputes with the tax authorities.

Tax distinction between private asset management and commercial activity

In addition to the purchase and sale of crypto assets, many market participants also generate ongoing income, for example through staking, lending or mining. In these cases, crypto assets are not merely held, but actively used within a network or made available to third parties.

The tax treatment of such activities depends largely on their specific organization and the underlying technical and economic structures.

We provide support with the tax classification of corresponding income, the structured preparation and evaluation of transaction data and the legally compliant presentation to the tax authorities.

Taxation of staking, lending and mining income

The tax treatment of activities in connection with crypto assets depends largely on whether the activity still qualifies as private asset management or already has the characteristics of a commercial operation in the sense of the § 15 EStG fulfilled.

The tax authorities have not yet standardized specific demarcation criteria for crypto assets. Rather, the general tax principles for distinguishing between private asset management and commercial activity are used, as they are known in particular from securities and foreign exchange trading (see BMF letter dated March 6, 2025, para. 52).

The circumstances of the individual case are always decisive. Particularly in the case of high transaction volumes, a large number of individual transactions or organizationally and structurally professional trading activities, the tax qualification of the activity should be reviewed at an early stage.

Incorrect qualification can have considerable consequences, in particular for the type of income, ongoing declaration obligations, possible trade tax obligations and record-keeping and retention obligations.

In staking, cryptocurrencies are used in a proof-of-stake network for transaction validation. The holder makes their token available to the network directly or indirectly and receives in return Staking Rewards in the form of additional tokens of the same currency.

Technically, participation takes place either by operating one’s own validator or through the Delegation of tokens to a validator or staking provider.

For tax purposes, a distinction must be made between two constellations in particular:

  • active staking (validator operation)
  • passive staking (Delegation of tokens)


With passive staking, the validator takes over the technical validation tasks completely. For tax purposes, in such cases other income within the meaning of § 22 No. 3 EStG may be considered. This income is currently subject to a Exemption limit of € 256 per person and calendar year.

Operating your own validator, on the other hand, can – especially with sustainable activities and corresponding organizational effort – also be Commercial income justify. In particular, the role that the taxable person technically plays in the network and whether there is independent participation in the consensus mechanism is decisive.

In lending, crypto assets are transferred to third parties for a limited period in return for remuneration. The recipient is entitled to use the crypto assets provided and is obliged to transfer them back at the end of the agreed term plus a fee. The remuneration is generally comparable to interest in economic terms.

For tax purposes, the income generated from this in private assets is generally recognized as other income within the meaning of § 22 No. 3 EStG classified as long as there is no commercial activity. The exemption limit of €256 per calendar year applies. The one-year holding period for private sales transactions (Section 23 EStG) remains unaffected by lending.

Processing typically takes place via specialized platforms that take care of both technical implementation and risk management. Under civil law, lending is classified as a money loan (Section 488 BGB), depending on the specific structure.

In mining, transactions are validated in so-called proof-of-work networks through the use of computing power. Participants provide hardware and energy for this purpose and receive newly generated coins or transaction fees in return.

In the opinion of the tax authorities, mining – particularly in the case of sustainable activities and the corresponding use of resources – may constitute a commercial activity. In particular, the scope, organization and economic orientation of the activity are decisive. 

However, in the case of small-scale or occasional participation other income within the meaning of § 22 No. 3 EStG come into consideration.

Communication with the tax authorities

In crypto cases, the quality of the actual processing often determines how a case is handled by the authorities.

The BMF letter dated March 6, 2025 emphasizes the cooperation and record-keeping obligations for transactions with crypto assets and also contains instructions for tax authorities on how to check the relevant circumstances.

We provide support in communicating with tax authorities, in the structured presentation of complex transaction processes and in the legal classification of the underlying facts.

Criminal tax risk analysis

Incompletely declared or incorrectly classified crypto transactions can not only lead to additional tax claims. In certain constellations, criminal tax law risks may also arise.

There is often a particular need for auditing if, for example, transactions over longer periods of time have not been fully declared, there are extensive trading activities, there is a foreign connection or the origin of individual crypto assets is not fully documented.

An early legal analysis makes it possible to realistically classify possible risks and examine suitable options for action.

We analyze the existing documentation, assess the initial tax situation and support you in developing a legally viable course of action - if necessary also in the case of a voluntary disclosure.

In practice, uncertainties often arise at the factual level - for example in the Identification of the beneficial owner, the Reconstruction of complex transaction chains or with incomplete or technically difficult to evaluate documentation. 

This creates obligations for the taxpayer:

Obligations to cooperate and provide information

Taxpayers are obliged to cooperate in determining the tax-relevant facts (Sections 90 ff. AO). In particular, this includes the obligation to disclose all facts relevant to taxation. to disclose completely and truthfully.

The duty to cooperate is not limited to a mere response to inquiries from the tax authorities. Rather, it can also require an independent and structured presentation of complex issues including supporting documents.

Comprehensible presentation of transactions

General information on transaction movements or mere references to wallet addresses are generally not sufficient for complex crypto transactions. Rather, the tax authorities expect a Consistent and comprehensible presentation of economic processes and a clear allocation of individual transactions.

As part of the free assessment of evidence, the tax office can also use circumstantial evidence. With some of the tax office's usual conclusions, it helps to proactively present counter-evidence. The use of suitable evaluation software for processing can also be advantageous.

Increased obligations to cooperate in foreign matters

In matters with a foreign connection, increased obligations to cooperate apply (Section 90 (2) AO). The background to this is that the tax authorities‘ own investigations abroad are often only possible to a limited extent.

Taxpayers must therefore regularly help to clarify the tax-relevant facts themselves and obtain the relevant evidence, for example:

  • Account statements from foreign banks
  • Extracts from foreign registers
  • Contract documents or platform certificates
  • Translations of relevant documents, if applicable

Extended retention obligations for high income

Additional retention obligations apply to certain taxpayers. According to § 147a AO taxpayers whose positive surplus income is more than € 500,000 per calendar year, must, in principle, keep documents on the associated income and income-related expenses for six years.

As a result of the Growth Opportunities Act, this limit will be increased to €750,000 in 2027.

The provision particularly affects wealthy private individuals, for example in the case of high profits from private sales transactions (Section 23 EStG) or from other income in connection with crypto assets.

Are Bitcoin and other cryptocurrencies a „gray area“ from the perspective of the tax authorities?

This presentation would be misleading. The tax law standards exist and the tax authorities have various instruments at their disposal to clarify facts and assess them for tax purposes.

Tax estimate

If the facts of a case remain unclear or if obligations to cooperate are not fulfilled, the tax office may estimate the tax base.

This risk is particularly relevant in the case of crypto transactions if transaction chains are incomplete, wallets cannot be plausibly assigned or receipts are missing.

In practice, a tax estimate does not have a positive effect on the taxpayer in most cases.

External audit / tax audit

An external audit (§§ 193 ff. AO) – often also referred to as a tax audit – is particularly permissible for commercial, freelance and certain other taxpayers. It is used to check tax-relevant facts directly with the taxpayer.

As part of such audits, the following can also be crypto issues may be specifically addressed and examined in depth. This concerns, for example, trading activities, the allocation of crypto assets to business assets, documentation issues or the plausibility of declared profits and losses.

We support clients both preventively in the structured processing of crypto transactions and in ongoing or already completed external audits, for example in the legal classification of the facts and communication with the tax authorities.

Collective requests for information and production

Collective requests for information and production are a central instrument of the tax administration to clarify previously unknown tax cases in the crypto area. On the basis of Sections 93, 97 and 208 (1) No. 3 AO, tax authorities can – in particular in the context of tax investigations – request specific information from crypto exchanges.

In contrast to individual requests for information, a collective request for information is not directed against a specifically named person, but against a large number of users who meet certain criteria (e.g. trading volume, time period, transaction types). The aim is to, identify potentially tax-relevant issues, which have not yet been explained.
For taxpayers, this means that even supposedly unrecognized transactions will become increasingly traceable.

The tax authorities combine such requests for information with other sources of information. These include money laundering reports from banks to the Financial Intelligence Unit (FIU), which in turn informs the tax investigation authorities and the automatic exchange of information (DAC 8). Anyone who has not yet declared crypto income should therefore check preventively whether there is a need for action.

Increasing international exchange of information

At European level, the DAC8 Directive in particular stipulates that providers of crypto services must report tax-relevant information about users and transactions to the tax authorities in future. The directive has been in force since 01.01.2026. Participating countries are the EU member states and qualified third countries.

At an international level, the OECD has also developed the Crypto Asset Reporting Framework (CARF), a standard for the automatic exchange of information on crypto transactions. The aim of these regulations is to make tax-relevant information on crypto assets available across borders.

At the same time, financial authorities are also increasingly using specialized blockchain analysis tools to trace transaction chains and evaluate wallet movements.

Criminal tax law risks

Anyone who fails to declare or incompletely declares tax-relevant profits or other tax-relevant facts not only risks additional tax claims and interest.

Depending on the situation Consequences under criminal tax law are eligible, in particular because of Tax evasion (§ 370 AO) or reckless tax evasion (§ 378 AO).

Such risks can arise, for example, if:

  • crypto profits were not declared over longer periods of time,
  • extensive trading activities were incorrectly classified for tax purposes,
  • income from staking, lending or mining was not taken into account or
  • transaction histories are incompletely documented.


In the run-up to a transaction, especially for larger transaction volumes, a Early legal review and structured processing of the facts be useful in order to be able to realistically assess possible risks.