New BMF letter on crypto in income tax law (2025): What will change for crypto investors?

On 6 March 2025, the German Federal Ministry of Finance (BMF) published a new letter on the income tax treatment of crypto assets, replacing the previous letter from May 2022. In large parts, the contents of the previous BMF publication are confirmed, but there are also some exciting changes that crypto investors should be aware of.

What will remain the same when it comes to the taxation of cryptocurrencies?

As already described, many of the statements made in the 2022 BMF letter on the income tax treatment of crypto continue to apply. This applies in particular to the following points:

• Crypto assets remain economic goods: They are taxable when sold or exchanged and regularly fall under private sales transactions. This means that profits are taxable if the crypto assets are held for less than a year and tax-free if they are held for more than a year.
• Mining & Staking: Are taxable income, either as a business or other income.
• Airdrops & Hard Forks: These may be taxable. The decisive factor here is the provision of a service in return.
• Loss offsetting: Losses can still only be offset against other private sales transactions.
• Business vs. private assets: Business assets are subject to the accounting obligation, private assets to § 23 EStG.

However, the new BMF letter dated 6 March contains significant additions and clarifications that are relevant for the taxation of cryptocurrencies and digital assets. In the following, we summarise the most important changes for you.

What changes in the taxation of crypto assets with the new BMF letter?

In addition to a revised terminology, the writing clarifies the tax treatment of airdrops, hard forks and the determination of profits from crypto transactions. For the first time, decentralised financial markets (DeFi) and smart contracts are also classified for tax purposes. However, despite the revision, not all crypto areas are yet covered.

In the following sections, you will learn what exactly has changed and what you need to pay attention to as a crypto investor.

Changed terminology and definitions

The term ‘virtual currencies’ has been replaced by ‘cryptoassets’ to allow broader coverage of different token types.

The new BMF letter also makes a clearer distinction between:

• Currency tokens like Bitcoin or Ether: These are both a means of exchange and crypto assets held for speculative purposes.
• Utility tokens: These represent rights of use, e.g. for access rights or the right to exchange for goods/services.
• Security tokens: These are comparable to securities. However, the respective use case is important for the correct taxation of these crypto assets.

Simplification in the determination of the exchange rate

The price of a trading platform or a web-based list can be recognised as the market price for the acquisition costs and disposal proceeds. According to the BMF, it is also possible to use a daily market value or daily average price, provided that a consistent valuation is carried out. However, the daily prices should come from the same source.

Taxation of mining

Mining – income from block creation – is either income from a trade or business (pursuant to Section 15 of the German Income Tax Act (EStG)) or other income from services within the meaning of Section 22 no. 3 of the German Income Tax Act (EStG). However, this always depends on the individual case – for example, block creation that is sustainably designed to be repeated indicates a trade or business.

Taxation of staking, lending, masternodes

Staking is now explicitly divided into active and passive staking. Passive staking (provision of crypto assets without active block creation) is considered a separate type of income. Valuation of the crypto assets when staking can now be done at the time of claiming, which simplifies the determination of income. But be aware: unclaimed rewards are also taxable.

New rules also apply to lending: income from lending cryptocurrencies is now explicitly treated as taxable capital gains or other income.

The same income tax rules apply to those who generate income from masternodes as to those who generate income from block creation using Proof of Stake.

Tax treatment of airdrops and hard forks

Airdrops and hard forks are now considered separately for business and private assets:

• Hard forks are separate assets in business assets. In private assets, they may be subject to tax as private capital gains if the new crypto assets are sold within one year of the purchase of the original crypto assets.
• Airdrops: They can lead to other income from services in accordance with § 22 number 3 EStG, which, however, is linked to a service provided by the recipient. Without consideration, however, it may constitute a gift.

Innovations in the area of DeFi and smart contracts

Decentralised financial markets (DeFi) are being detailed for the first time, particularly smart contracts and peer-to-peer trading. Taxpayers using DeFi protocols will need to carefully consider their tax obligations.

Smart contracts are recognised as automated transaction mechanisms, the tax treatment of which depends on how they are used.

Decentralised exchange platforms (DEX): The tax treatment of bartering on DEX follows new rules. Profits are generally taxable.

What about NFT and liquidity mining?

These two crypto assets and their special features are not (yet) taken into account in the new BMF letter. However, according to the BMF, the letter will be continuously updated, so that more specific statements can be expected in the future.

Tax reports and proof of income: Without them, nothing works in crypto trading

The requirements for crypto investors to provide evidence and documentation are being significantly tightened. In the future, anyone who trades in crypto assets will have to keep detailed transaction overviews and tax reports – and not only for centralised trading platforms, but also for decentralised financial markets (DeFi):

• Extended documentation requirements: Taxpayers are now obliged to keep detailed transaction overviews and tax reports from trading platforms and wallets.
• Transaction overviews: Taxpayers must ensure that all transactions carried out on trading platforms or in wallets are fully documented. This applies to both structured formats (CSV, XML) and unstructured formats (PDF statements).
• Tax reports: It is recommended to use tax reports from trading platforms or specialised software solutions. These should include all tax-relevant transactions to enable a proper determination of the tax liability.
• Retention requirements: Trading platforms often limit the availability of historical data. Taxpayers should regularly back up transaction data, as subsequent access may no longer be possible.
• Verification requirement: Taxpayers must ensure that tax reports and transaction overviews are accurate and complete. Inaccurate or incomplete records may result in tax disadvantages or estimates by the tax office.
• Decentralised financial markets (DeFi): An enhanced documentation requirement is being introduced specifically for DeFi transactions. Taxpayers who use DeFi protocols must document all activities there in a comprehensible manner, as many platforms do not provide central transaction overviews.

The tax authorities generally recognise tax reports from private providers, provided they are plausible and complete. Platforms such as CoinTracking, Accointing or Blockpit offer comprehensive reports for the tax reporting of crypto transactions.

Taxpayers should ensure, however, that these reports are regularly backed up, as some platforms only provide temporary access to past transaction data.

It is also important to ensure that the platforms do not make any subsequent changes to their reports.

New BMF letter on income tax for cryptos: What you need to be aware of as a crypto investor in 2025

Those who have been rather careless in documenting their crypto investments should take action now at the latest and check whether their previous tax records meet the new requirements. This applies in particular to users of staking, lending or DeFi platforms.

All purchase and sales records must be stored – in the wallets or in the transaction lists of the accounts. It is best to use platforms such as CoinTracking, Accounting or Blockpit for this, so that you have all the important data for your tax return ready more quickly and easily.