How are profits and losses from Bitcoin treated for tax purposes?
Cryptocurrencies such as Bitcoin, Ethereum, or Litecoin are increasingly used as a means of payment, but they remain primarily speculative assets.
The Federal Ministry of Finance has issued guidelines on the taxation of cryptocurrencies (BMF letter dated 06/03/2025).
Important tax principles:
- Capital gains from the sale or exchange of cryptocurrencies are taxable if the period between acquisition and sale is not more than one year (§ 23 para. 1 no. 2 EStG).
- New from 2024: Gains remain tax-free if the total gain from private sales transactions in the calendar year is less than 1,000 Euro (allowance).
- After the one-year holding period, the sale is tax-free, even if the cryptocurrencies were previously lent or staked.
- Repeated or extensive trading in cryptocurrencies may be considered a commercial activity and is then subject to income tax under § 15 EStG.
- Those who receive cryptocurrencies through mining or forging (block creation) generally earn commercial income. Under certain conditions, other income (§ 22 no. 3 EStG) is possible – e.g. in the case of occasional activity.
- Small amount regulation: Income from activities such as mining or staking remains tax-free if it is under 256 Euro per year in total.
The Federal Fiscal Court (BFH) ruled on 14 February 2023 (IX R 3/22) that cryptocurrencies such as Bitcoin, Ethereum, and Monero are considered assets within the meaning of the Income Tax Act.
A taxpayer made a profit of around 3.4 million Euro from trading cryptocurrencies in 2017. The BFH clarified that these profits are subject to income tax if sold within the one-year period. The classification as an asset and taxation under § 23 EStG are constitutionally permissible.
Note: The taxation applies to all common cryptocurrencies, not just Bitcoin. The decisive factor is always the period between acquisition and sale and the type of use (private or business).
