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What the rules of the BMF circular mean in practice for your tax return is explained in our foundational guide Crypto Tax Advisor.
Introduction:
Crypto investors in Germany have to keep an eye on their crypto taxes. In March 2025 the Federal Ministry of Finance (BMF) published a new BMF circular on the taxation of cryptocurrencies. This circular, a kind of official guideline from the finance ministry, brings clarity and updates compared with the previous version of 22.05.2022. Why is that important? Because it provides detailed requirements on how cryptocurrencies are to be recorded. In this article we look at what has changed, explain the new rules (among them the holding period for crypto gains, staking, NFTs, memecoins, mining) and give practical tips for crypto investors. You will also learn how to document cryptocurrencies (keyword CoinTracking) and why professional crypto tax advice is worthwhile now.
Comparison of the BMF circulars: 22 May 2022 versus 06 March 2025
The following table summarises the most important changes and clarifications of the new BMF circular (2025) compared with the version of May 2022:
| Aspect | BMF circular (May 2022) | New BMF circular (March 2025) |
| — | — | — |
| Designation of the assets | Spoke of „virtual currencies and other tokens“. Uniform treatment of all crypto assets as economic assets. | Now uses the generic term „crypto assets“. Distinguishes more clearly between payment tokens, utility tokens and security tokens (margin no. 3). (Possible differing tax treatment of security tokens as financial instruments.) |
| Holding period for crypto gains | Gains from the sale or exchange of cryptocurrencies held as private assets tax-free after a holding period of more than 1 year; taxable within 1 year (Section 23 EStG). A planned extension to 10 years where the assets are used (staking/lending) was not implemented (the final 2022 version kept only 1 year). | Confirmed: the holding period remains 1 year, including with staking or lending. No 10-year period. Held for more than 1 year equals tax-free, provided it is a private disposal transaction. |
| Staking and lending | No loss of the holding period through staking/lending (see above). Staking income (rewards) counts as other income (Section 22 no. 3 EStG), to be valued at the market rate on receipt. A distinction between active and passive stakers was introduced: active staking (validator) can count as commercial; passive delegation staking is usually private asset management. | Unchanged: staking and lending income remains tax-free on sale where the holding period exceeds 1 year. The BMF reaffirms the distinction: validators (block producers, proof-of-stake forging) count as commercial; passive stakers (delegators) generate private income. In practice this means: normal staking by private investors does not lead to a 10-year holding period, but the staking rewards received are to be taxed as income. |
| Mining | Basic assumption: mining equals commercial activity (income from a trade or business). Miners are subject to income tax (and where applicable trade tax). Mining pools can count as a co-entrepreneurship (depending on the arrangement). | Remains: mining is still classified as commercial. Income from mining coins is taxable as commercial income. No change from the earlier assessment. (For miners in the private sphere there is in practice hardly any leeway; the tax office continues to assume commerciality.) |
| Airdrops | Previously no express passage, with some uncertainty: is an airdrop immediately taxable on receipt? (Generally it was held that if there is no consideration in return, then there is rather no taxable event on receipt, given the character of a gift.) | Clarification: airdrops are not automatically taxable. Important: if the recipient has provided no consideration for the airdrop (a pure gift), no income tax arises at the time of receipt. (Taxation only when the coins received are sold, as a private disposal transaction with a new holding period starting on receipt.) If, however, something was performed in order to receive the airdrop (for example participation in campaigns), a tax liability as other income could arise. |
| Hard forks | Likewise no detailed rule in the 2022 circular. The usual view was: with a hard fork (for example Bitcoin versus Bitcoin Cash) a new economic asset arises without acquisition costs; taxation only on sale. | Clarification: hard forks do not lead to tax immediately. The split itself is not taxable on allocation of new coins. Taxation only takes place when the new coins are sold or exchanged. The acquisition costs of the crypto assets existing before the hard fork are to be apportioned to these economic assets. The basis of apportionment follows the ratio of the market rates of the various crypto assets at the time of the hard fork. |
| NFTs (non-fungible tokens) | The NFT area was not dealt with in the old circular, leaving open questions on tax classification (collectible, art, economic asset?). | No change: NFTs are still not expressly dealt with. The BMF has excluded NFTs and also liquidity mining from the current circular (margin no. 5) and announces that it will supplement these topics in future. For investors this means: in the absence of special rules, the general principles presumably apply (NFT sales as a private disposal transaction with, where applicable, a 1-year holding period). |
| Internal transfers | It was implicitly clear that moving coins between your own wallets does not constitute a disposal (no sale, no exchange). However, there was no express mention. | Newly emphasised: internal wallet transfers are not taxable. Only an actual sale of crypto for euros or the exchange of one cryptocurrency for another triggers a taxable disposal gain. Investors can therefore move coins between their own exchange accounts and wallets without triggering tax, but should document this. |
| Documentation and tax reports | General record-keeping obligations under Section 90 AO already applied, but in the crypto context many points of detail were open. No specific reference to tax tools or standardised reports in the old circular. | New focus: detailed requirements on duties to cooperate and to keep records from margin no. 87. The BMF demands clean evidence of all crypto transactions. For the first time the term „tax report“ is mentioned (margin no. 29b), meaning standardised overviews, for example from tools such as CoinTracking, that serve as documentation. The circular also specifies how transactions are to be recorded in terms of timing and value (for example timestamps accurate to the second and appropriate rates on conversion). In short: the duty of complete documentation is strongly emphasised in order to make review easier for tax offices. |
Note: the new rules from March 2025 replace the previous BMF circular of 2022 in full. Many principles remain the same (for example the holding period, the treatment of staking and mining), but gaps have been closed and details added so that both crypto investors and tax offices have more orientation.
Explanation of the most important changes in detail
Below we examine the most important points from the new BMF circular in more detail and explain what they mean for crypto investors.
Holding period for crypto gains and private disposal
The holding period determines whether gains from the sale of cryptocurrencies are taxable. In Germany, crypto assets held as private assets count as private disposal transactions (Section 23 (1) no. 2 EStG). This means: sale within one year of acquisition leads to a taxable gain (at the personal income tax rate, up to 45%). Sale after more than one year is tax-free (however high the gain), provided the assets are not business assets. This 1-year holding period also remains untouched in the new BMF circular.
Important to know: there were earlier discussions as to whether certain uses of the coins (for example staking or lending) could extend the holding period to 10 years. The 2021 BMF draft did indeed provide for a 10-year period where income was generated. But the final 2022 circular and now again the 2025 circular make clear that this is not the case. Staking or lending cryptocurrencies does not extend the holding period, which is a real privilege for crypto investors. You can therefore lend or stake Bitcoin, Ethereum or Solana, for example, and still sell them tax-free after a holding period of more than one year. The new circular expressly confirms this investor-friendly rule („the one-year period is retained“).
What remains, of course, is that if the holding period is under one year, the gain is fully taxable. Here an exemption threshold of 1,000 EUR (until 2023: 600 EUR) per year applies to all private disposal gains (not only crypto, but also gold sales for example). If you stay below 1,000 EUR with all such gains, no tax arises; with a total gain of 1,000 EUR or more, by contrast, the entire amount is taxable. This threshold is set out in the law (Section 23 EStG) and was not changed by the new BMF circular. For crypto traders this means: frequent buying and selling within one year should be well documented, because it is relevant for tax. Anyone who can HODL, that is, hold coins for longer than one year, has a major tax advantage.
Staking and lending: private income versus commercial activity
Staking (providing coins to secure the network under proof of stake) and lending (lending coins in return for interest) are popular in crypto but raise tax questions. The BMF circular 2025 brings further clarity here:
– Active staking means running a validator node yourself and taking part in block creation (forging). The BMF no longer sees this as private asset management; it resembles mining. Consequence: depending on the scale this counts as a commercial activity. The validator receives block rewards and transaction fees, which according to the BMF corresponds to the picture of a service provider. Anyone running their own validators professionally (for example their own Ethereum validator with 32 ETH) should check whether they are acting commercially; in that case the entire staking income would be commercial income and the staked coins held could also count as business assets (then no tax-free sale after one year, so beware of tax infection). Early crypto tax advice is definitely worthwhile here in order to set the course correctly.
– Passive stakers, by contrast (the typical private investor delegating their coins to a staking pool or using an exchange), count as private individuals engaged in asset management. Their income is subject to income tax (see above, Section 22 no. 3), but they are not running a business.
In practice: most crypto investors who stake via Binance, Kraken and the like or delegate via a wallet fall into the passive category, so no business registration is necessary, but the rewards must be declared in the tax return (Annex SO) as „income from services“.
In summary: for staking tax in 2025 the position is: tax the staking rewards, but do not worry about the holding period of the coins. And: only those who are very active in the consensus process enter the commercial sphere.
Mining: commercial, and it stays commercial
For crypto mining (proof of work, for example mining Bitcoin) nothing has fundamentally changed, but the BMF confirms the line: mining is as a rule a commercial activity. That was already envisaged in 2022 and continues to apply. So anyone mining Bitcoin with their own mining rigs or participating in a mining pool generates income from a trade or business.
Consequences for miners:
For hobby miners on a small scale there may be a boundary to a non-profit-making activity, but the tax administration initially assumes commerciality. So anyone mining at home „in the cellar“ should take care: as soon as it is set up on a lasting basis and there is an intention to make a profit, it can be a business for tax purposes. It is advisable here to consult a tax advisor in order to clarify obligations (business registration, where applicable VAT on mining abroad and so on).
Airdrops and hard forks: when does tax arise?
Airdrops (free token distributions) and hard forks (blockchain splits in which, for example, 1 coin suddenly becomes 2 different ones) long caused uncertainty: do such coins received have to be taxed immediately as income? The new BMF circular brings relief here:
NFTs: still a grey area in taxation
Non-fungible tokens (NFTs) experienced a boom in 2021/2022 (digital art, collectibles such as Bored Ape Yacht Club and the like). For tax purposes NFTs do not fit neatly into the classic category of „other economic assets“. The BMF said nothing about this in 2022, and unfortunately made no new statements in 2025 either. The circular expressly states that NFTs are not yet the subject of the BMF circular.
What does that mean in practice? Essentially we have to apply the general tax rules. In the absence of specific requirements, the tax administration will presumably classify NFTs as other economic assets, by analogy with cryptocurrencies. Sales of NFTs held as private assets would thus likewise fall under Section 23 EStG: a sale gain within 1 year is taxable, after that tax-free. There are, however, special cases to consider:
In short: anyone trading NFTs should be careful and document precisely. In case of doubt, crypto tax advice can help in making the correct declaration in the tax return (crypto NFT). We expect the BMF to provide updates on this in future, since NFTs are an important part of the crypto ecosystem.
Memecoins (Dogecoin, Trump Coin, Bonk, Popcat and the like): no joke for tax either
In the eyes of the tax office it makes no difference whether it is Bitcoin or a funny memecoin such as Dogecoin, Shiba Inu or Popcat: for tax purposes all cryptocurrencies are treated the same. There are no special rules for „fun coins“. Concretely this means: if you sell a memecoin at a profit, the same taxation of cryptocurrencies applies as described above. In particular:
Conclusion on memecoins: do not be deceived by the fun factor. „How are cryptocurrencies taxed?“ is answered the same way for serious coins and fun coins alike: according to the rules of the Income Tax Act. Anyone who invests in Shiba Inu for a laugh should keep records of acquisition and sale just as with Bitcoin. Precisely because memecoins have extreme fluctuations in value, the tax component is relevant (high gains also mean tax payments, high losses can at least be offset against other gains).
Documentation of crypto transactions: obligation and best practice
A central topic of the new BMF circular 2025 is documentation. The tax office now expects even more detailed records of all relevant transactions from crypto investors. Why? Cryptocurrency transactions often take place on various exchanges, wallets or even decentrally, and without complete evidence taxation becomes difficult. From margin no. 87 the BMF circular provides a detailed framework of the duties to cooperate and to keep records that taxpayers have.
What does that mean concretely for you as an investor?
Tip: from now on at the latest, keep a clear transaction log of your crypto activities. Use software to document cryptocurrencies, for example CoinTracking, which offers direct import interfaces to many exchanges. That way you avoid errors and gaps. The new BMF circular emphasises: anyone who does not cleanly evidence their wallet transactions risks problems with the tax office. There is nothing to add to that; transparency pays off here. In case of doubt a crypto tax advisor can help set up the documentation correctly (keyword: procedural documentation).
Help with operating the tool and recording transactions correctly is also provided by our online course: CoinTracking without chaos
Practical tips for crypto investors (tax year 2025 and outlook)
Finally we would like to give some practical tips on how to make the best use of the tax rules as a crypto investor, particularly in the light of the new BMF requirements. These help you to declare your crypto tax return correctly and perhaps even to save tax legally:
Example: gain from a Bitcoin sale 5,000 EUR, loss from an Ether sale minus 3,000 EUR (in each case only 2,000 EUR of gain is taxable). Realise losses deliberately if you want to restructure anyway; it can reduce your tax burden. Unused losses can be carried back one year or carried forward into the future without limit.
Conclusion: more clarity, act now and bring in a professional if needed
The new BMF circular of 06.03.2025 brings a great deal of clarity for crypto taxpayers. Important questions, from the holding period through staking and airdrops to documentation, are answered (even more clearly). For crypto investors that means relief on the one hand, since official guidelines are now available in black and white. On the other hand the responsibility to implement these rules increases: the documentation obligations in particular are strict, and the tax office looks more closely.
If you invest in Bitcoin, Ethereum or other cryptos, you should take the points mentioned into account and adjust your tax strategy accordingly. Many people can improve their situation simply by holding for more than one year or optimise it through clean loss offsetting. The technical tools for crypto taxes are your helpers too.
Not least: crypto taxes remain a complex field. What is clear today can raise questions again tomorrow through new legislation or rulings. Do not hesitate, therefore, to make use of professional crypto tax advice where there is uncertainty. An experienced crypto tax advisor knows the pitfalls (whether with memecoin tax or exotic DeFi income) and helps to make the crypto tax return correct and advantageous.
Taxes are complicated, but with the right partner at your side and knowledge of the current rules they need not be a source of anxiety, not even in the wild crypto space.
Are you looking for a crypto tax advisor for Bitcoin, DeFi and NFTs? Contact me for individual advice!
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Frequently Asked Questions on the BMF circular 2025
What does the BMF circular of 06.03.2025 govern?
It replaces the circular of 10.05.2022 and restates the administrative view on the income tax treatment of crypto assets: holding periods, staking, lending, mining, airdrops, hard forks, and for the first time detailed duties of taxpayers to cooperate and keep records.
What is the most important change compared with 2022?
The considerably sharper focus on documentation: the circular specifies which records the tax office expects and strengthens the wallet-based FIFO approach. In substance it confirms central points such as the one-year holding period, including for staked coins.
Does the new BMF circular also apply to earlier years?
BMF circulars bind the tax administration and are in principle applied to all open cases. For the past it depends on whether your assessments can still be amended. In ongoing proceedings it is worth checking whether the new administrative view works for or against you.
What does the 2023 BFH ruling mean in this context?
On 14.02.2023 (IX R 3/22) the Federal Fiscal Court confirmed that gains from the sale of cryptocurrencies are taxable as private disposal transactions. The question of principle has thus been settled at the highest judicial level, and the BMF circulars fill in the practical points of detail.



