Crypto Taxes in Germany Explained: Gifts, Cash‑Outs & Common Myths

Cryptocurrency taxation in Germany is often misunderstood. Many people believe that cashing out abroad, using peer‑to‑peer (P2P) transactions, or avoiding banks can legally reduce or eliminate taxes. In reality, German crypto tax law is based on residency and timing, not on where or how you cash out.

This article explains, in simple terms, how crypto taxes work in Germany, especially in cases involving crypto gifts, selling, and cashing out, so you can stay informed and compliant.

1. German Tax Residency: The Golden Rule

If you live in Germany (have your residence or habitual abode there), you are considered a German tax resident.

German tax residents are taxed on their worldwide income and gains, including cryptocurrency no matter where the crypto comes from or where you sell it.

This means:

Cashing out abroad does not automatically avoid German tax

Using foreign exchanges does not change tax obligations

P2P, cash, or mobile money methods do not override tax law

2. Receiving Crypto as a Gift (Schenkung)

Receiving crypto as a gift is not income tax, but it may trigger gift tax (Schenkungsteuer).

Example

If you receive €250,000 worth of crypto from a brother:

€20,000 is tax‑free

€230,000 is taxable under gift tax

Estimated gift tax: ~€42,000 (progressive rates)

📌 Important: Gifts must be reported to the Finanzamt, usually within 3 months, even if no tax is due.

3. Selling Crypto: The 1‑Year Rule

Germany treats crypto as a private asset.

Holding Period Rule 

Held more than 1 year → profits are tax‑free

Held less than 1 year → profits may be taxable

There is a small annual exemption (around €1,000 in private sale gains).

Gifted Crypto & Holding Period

When crypto is gifted:

You inherit the giver’s original purchase date

If the giver already held the crypto for more than 1 year, you may sell immediately tax‑free (after gift tax matters are settled)

4. Cashing Out: What Actually Matters

Many people ask: “What if I cash out in another country?”

The legal reality

Tax is based on residency, not cash‑out location

Selling crypto abroad while living in Germany is still taxable

Germany can audit up to 10 years retrospectively

Methods that do NOT remove tax liability

Foreign exchanges , P2P trades, Cash payments, Mobile money , Using third parties

These methods may change how you receive money  not whether tax is due.

5. Leaving Germany: When Tax Can Change

Germany generally loses taxing rights only after you legally end tax residency.

To do this properly:

Deregister your address (Abmeldung)

Physically leave Germany

End habitual residence

Establish tax residency in another country

Selling crypto before or during residency remains taxable in Germany.

Gift tax may still apply if the gift was received while resident

6. Documentation Is Essential

Whether you stay or leave Germany, always keep:

Gift agreement (written)

Wallet transaction records
Acquisition dates and values
Proof of residency status
Tax filings and confirmations

Good documentation protects you during audits and bank checks.

7. Common Myths (and the Truth)

Myth: “If no bank is involved, no tax applies.”
Truth: Tax law applies regardless of payment method.

Myth: “P2P trades are invisible.”
Truth: Blockchain + AML rules make transactions traceable.

Myth: “Cashing out abroad avoids German tax.”
Truth: Residency decides taxation, not location.

Conclusion

Germany’s crypto tax system is strict, but predictable.

If you understand three key points, you avoid most problems:

Residency determines tax liability

Gifts and sales are taxed differently

Timing and documentation matter more than methods

This article is for educational purposes only and not individual tax advice. For large amounts, consulting a German Steuerberater is strongly recommended.