The ministry circular on crypto assets and its consequences
One document, two histories: the foundations laid in 2022 and the recast of 2025. At several points we do not follow the administrative view — and we are conducting the cases in which those points will be decided. This article sets out where the circular holds and where it is open to attack.
- A ministry circular binds the tax offices, not you and not the courts.
- The circular of 6 March 2025 recasts the 2022 version — it does not supplement it.
- With airdrops we distinguish three tiers. Only the highest is uncontroversially within the scope.
- On lending, on airdrops and on wallet-by-wallet computation we take a different view from the authorities — with pending cases on all three.
- Paragraph 46 denies that a reciprocal relationship is required for a supply — that is the heart of the dispute.
- The circular in full is available here as a PDF, in German and in English.
A recast, not an addendum
A widespread misunderstanding: the circular of 6 March 2025 does not supplement the 2022 version — it replaces it. Anyone still working with the old paragraph numbers is citing into thin air.
The opening sentence is unambiguous: following discussion with the supreme tax authorities of the federal states, the circular of 10 May 2022 is recast as set out. There is therefore only one document, and the paragraph numbers have been reassigned throughout. That is more than a formality — anyone relying in an appeal on "paragraph 70 of the circular" has to say which circular is meant, because the number picks out something different in each version.
| Area | Change | Practical significance |
|---|---|---|
| Terminology | "Virtual currencies and other tokens" replaced by "crypto assets"; defined in paragraph 1 by reference to distributed ledger technology | Also captures assets not yet discussed in 2022 |
| Evidence section | A new chapter III, paragraphs 87 to 105, on filing, cooperation and record-keeping duties | The real addition. It decides the outcome in an audit |
| Tax reports | Addressed for the first time in paragraphs 29b and 90: report settings, disposal sequence method and corrections must be disclosed | A report alone is no longer enough — the settings belong with it |
| NFTs | Paragraph 5 expressly excludes non-fungible crypto assets from the scope | There is still no administrative position on NFTs |
| Transition | Paragraph 106: for assessment periods up to and including 2024, differing price determinations and records will not be challenged | Earlier years are protected — the new standard applies from 2025 |
The substantive passages answer the question whether a transaction is taxable. The new chapter III answers the question what happens if you cannot prove it. In an audit the second question is almost always the decisive one — nobody disputes any more that a swap is a disposal. What is fought over are acquisition dates, acquisition costs, and which tranche left on a partial sale.
What a circular binds — and what it does not
A point regularly misunderstood in advice meetings, and the source of all the room that exists.
A circular of the Federal Ministry of Finance is an administrative instruction interpreting the law. It tells the tax offices how to apply the statute. It is not a statute, not a regulation and not case law.
The tax administration is bound. Taxpayers and tax courts are not. A court examines the statute, not the administrative view — and departs from it where it thinks that right.
Two things follow for you. First, where the circular works in your favour you can rely on it; the tax office may not simply depart from it. Second, where it works against you, that is not the last word. It is the beginning of an appeal.
How we handle this
In every engagement we separate two levels and disclose them separately: what is the administrative view, and what is ours? Where the two diverge, that is stated expressly in the return. This is not only a matter of candour but the most effective protection against the accusation of having concealed something — someone who sets out a differing legal view openly is visibly not acting in secret.
Why this separation decides the question of evasion (in German) is the subject of a separate article.
Where we take a different view
At four points we regard the administrative view as wrong. On all four, cases are pending or already decided — most of them conducted by us.
| Point in dispute | Administrative view | Our view | Case |
|---|---|---|---|
| Lending transfer for consideration |
Other income; the extended holding period is not applied | The concept of money in section 20(1) no 7 EStG and comparability with foreign currencies are unresolved — with substantial consequences for the offset pool and the rate | BFH VIII R 22/25 |
| Airdrops allocation without consideration |
Inconsistent: the circular separates active from passive airdrops in a way that needs interpretation, while the Hamburg tax authority treats merely holding a domain as a supply in the ENS case | Three tiers. Without a reciprocal link between conduct and allocation there is no supply within section 22 no 3 EStG — merely holding is not one | FG Baden-Württemberg 4 K 2402/25 |
| Wallet-by-wallet computation per wallet |
Computation per wallet or address | Computation across wallets remains permissible; splitting shifts acquisition dates and with them holding periods, without a statutory basis | FG Niedersachsen 10 K 165/23 |
| Disposal sequence specific identification, average, FIFO, LIFO |
Paragraph 61: specific identification as the principle; where impossible, FIFO for the holding period and the average method for value. LIFO is not provided for | Specific identification is declared impossible too readily in practice. And since section 23 EStG prescribes no sequence, LIFO is defensible too, so long as it is applied consistently | FG Berlin-Brandenburg 4 V 4039/26 |
There is scarcely any case law from the highest court on the core questions of crypto taxation. While that is so, the circular decides matters in practice — not because it is law, but because nobody contradicts it. Advancing a different view only in an advice meeting changes nothing.
So we keep affected assessments open and conduct the cases ourselves. On the disposal sequence that has already had an effect: the Berlin-Brandenburg Tax Court granted suspension of enforcement by order of 12 June 2026, because the tax office had applied FIFO where the taxpayer had calculated on LIFO. All our cases
There is an immediate consequence for you: where one of these questions touches your case, the assessment should not become final. An appeal costs little; a final assessment excludes you from every future development. Appeals and litigation
Airdrops: the three tiers
The blanket question "are airdrops taxable?" has no answer. What matters is whether the allocation is consideration for conduct — and that is answered differently in each of the three basic constellations.
The governing provision is section 22 no 3 of the Income Tax Act. A supply within that provision is any act, tolerance or forbearance capable of being the subject of a contract for consideration. But the real question is not whether there was conduct and an allocation at all — it is how closely the two must be linked.
In paragraph 46 the circular expressly states that a synallagmatic, that is reciprocal, relationship between supply and consideration is not required. On that view it is enough that the taxpayer accepts as consideration something granted in economic connection with their conduct — thereby allocating that conduct to the commercial sphere. This is founded on the Federal Fiscal Court's judgment of 24 April 2012 (IX R 6/10).
We regard that derivation as too wide. Someone who uses an application out of their own interest and months later receives an unsolicited allocation has not "accepted something as consideration" — they have received something. The difference between conduct for consideration and a mere occasion for it is exactly what paragraph 46 flattens.
Three tiers follow — and the authorities agree with us only on the first. The overview here is enough for classification; valuation, the threshold, the later sale and the filing are covered in the separate article on airdrops (in German).
Random airdrops — outside the scope
The recipient did nothing to obtain the allocation. It arrives because they happened to hold a particular address on a given date, or used an application in the past without any allocation having been held out for it. There is no supply for which the allocation would be consideration — and therefore no income under section 22 no 3 EStG.
Important: here the authorities are even on our side, but only just. Paragraph 71 makes clear that the public key suffices for an airdrop allocation — unlike discount schemes or prize draws, which need a postal address. Someone giving only their address therefore makes no supply. As soon as personal data is added, however, going beyond what the technical allocation requires, paragraph 71 sees a supply in that — and so a KYC procedure already falls within it on the administrative view.
We do not follow that. An identity check is cooperation in the processing compelled by financial regulation, not a sale of data. Someone passing it is not being paid for it; they merely obtain access to what was intended for them anyway. Expect the tax office to object at this point — and the objection should be fought.
In practice this tier is in fact recognised. In the proceedings before the Nuremberg Tax Court (judgment of 22 January 2025, 3 K 760/22) the claimant had received allocations without KYC and without any minimum trading volume; the tax office expressly did not tax them and assessed only the income from staking and claiming under section 22 no 3 EStG.
The middle case — in dispute
The most common case in practice and the most interesting legally: the recipient did something, but did not know beforehand whether they would receive anything, when, how much, or on what rules. The allocation criteria were only fixed afterwards — often only after the snapshot — and attach to conduct towards a third party, not towards the party making the allocation.
Someone who used an application because they wanted to use it did not use it for the sake of a consideration that did not yet exist. And here the circular itself supplies the lever: under paragraph 72, the attribution between supply and consideration is "interrupted or overlaid" where, alongside conduct, chance also decides whether anything is received. Paragraph 29 expressly gives as an example the case where only some participants in a larger airdrop are successful.
So wherever the allocation rules were fixed only after the snapshot, wherever a selection took place, or wherever the amount and timing were unforeseeable for the user, the element of chance applies — and liability falls away on the wording of the circular itself.
The Hamburg tax authority decided by order of 17 April 2023 (S 2257 – 2022/004) on the 2021 ENS airdrop that this was an active airdrop and that the allocation was within the scope of section 22 no 3 EStG. For it, the supply consisted in the user having held an ENS domain before 31 October 2021.
We regard that as untenable. Merely holding is not an act, tolerance or forbearance undertaken for a consideration. Someone who registered a domain because they needed it did not register it in order to receive an allocation months later on terms nobody knew at the time. And the authority relies on the circular while walking straight past paragraph 72 — the element of chance that covers precisely this case. We are litigating this before the Baden-Württemberg Tax Court (4 K 2402/25).
The same order incidentally shows where the line runs: for the TNS airdrop the allocation required at least fifteen transactions through the domain and a minimum stake. There, active conduct is comprehensible. In the ENS airdrop it is absent — and the authority treats both alike.
Note: for airdrops the circular additionally keeps open a classification as a gift. Successfully disputing liability under section 22 no 3 EStG is therefore not the end of the analysis. With larger allocations the gift tax side needs to be considered. Our article on inheritance and gifts (in German)
An airdrop for consideration — within the scope
Here the link is obvious: the terms are settled in advance, the recipient knows them, acts deliberately to obtain the allocation, and knows in essence what they will get for it. Someone who writes posts, promotes, tests, completes a task or provides liquidity because an allocation has been held out for it makes a supply and receives consideration for it.
That is within the scope of section 22 no 3 EStG, with the market value at the moment control passes as the accrual — and with the 256 euro threshold, which in these cases is regularly exceeded. There is no dispute here, and none should be pursued. The TNS airdrop, with its condition of at least fifteen transactions and a minimum stake, belongs structurally in this tier.
Airdrops do not belong in a single line across the board. Every allocation has to be assigned to one of the three tiers, and that assignment has to be reasoned — best of all with the allocation terms as they stood at the time of your conduct, and with the date on which they were published. That date is exactly what decides between tier 2 and tier 3.
Anyone who does not declare tiers 1 and 2 but stays silent has a different problem from a legal question. We declare them and disclose that we regard them as outside the scope. That is the difference between a legal view advanced openly and an understatement.
- For each airdrop, the date on which the allocation terms were published is recorded
- For each airdrop, the date of your own conduct is recorded — before or after
- The snapshot date is documented so far as known
- The market value at the moment control passed is established, including for tiers 1 and 2
- The assignment to a tier is named and reasoned in the return
- For tiers 1 and 2, the assessment is kept open by appeal
From "virtual asset" to "crypto asset"
A change of terminology that is more than cosmetic — but less than some hope.
The 2022 version spoke of "virtual currencies and other tokens". The recast moves uniformly to the term crypto asset and defines it in paragraph 1 as a digital representation of a value or a right that can be transferred and stored using distributed ledger technology. The tax administration thereby follows the terminology that has prevailed in European financial regulation.
The tax classification stays the same: crypto assets are assets, not currency and not investment capital within section 20 EStG. A sale from private assets is a private disposal under section 23 EStG, with everything that goes with it — the one-year period, the threshold, the closed offset pool.
Anyone inferring from the new term that financial regulation now governs the tax position is mistaken. Regulatory classification and tax classification run separately and can reach different results.
Where the term does have an effect
- It plainly also captures assets not yet discussed in 2022 — Ordinals, Runes, tokenised real-world assets.
- It eases alignment with the reporting duties, which attach to the same category. Our article on DAC 8
- It shifts the question of classification: no longer "is this a currency?" but "what does this asset embody?" — and that is the question that has always decided matters for utility and security tokens anyway.
Record-keeping and cooperation duties
The section for whose sake the recast was written — and the one that decides your result in an audit.
For private assets there is no duty to keep and retain books under section 147 of the Fiscal Code. That sounds like a relief and is not. Because you bear the burden of proof for everything that reduces the tax: the acquisition date from which the exemption after the one-year period follows, the acquisition cost that reduces the gain, and the disposal sequence that determines which tranche was sold.
Added to that is the general duty to cooperate under section 90(1) of the Fiscal Code. It requires you to disclose the facts fully and truthfully and to identify the evidence known to you.
Where you use an exchange or provider abroad, section 90(2) of the Fiscal Code applies. That provision requires more than information: it requires securing evidence in advance. Anyone able to obtain records must do so while they can — not once the tax office asks.
Saying that the platform is insolvent, shut down or no longer reachable is therefore no excuse. It describes precisely the case the duty exists for.
- Sec. 90(1) AOgeneral cooperation, identifying the evidence
- Sec. 90(2) AOenhanced cooperation and securing evidence in cross-border matters
- Sec. 147 AOretention duty — for business assets, not privately
- Sec. 147a AOsix years above €500,000 of surplus income
- Sec. 162 AOestimate where cooperation is absent
- Burden of prooffalls on whoever relies on the circumstance
The threshold in section 147a AO is €500,000 of positive surplus income in a calendar year, rising to €750,000 from 1 January 2027 (paragraph 105). It attaches to income, not to wealth — and with crypto holdings it is crossed more often than those affected expect.
Third-party tax reports: usable, but not self-supporting
The recast acknowledges that nobody manages without software any more. But it attaches conditions.
Almost every case with more than a handful of transactions is now prepared with tax software. That is appropriate and the authorities do not object to it. But the report is a calculated result, not a document of record — and a calculated result is only as good as what went into it.
Which sources the data came from and whether they are complete. Which disposal sequence method was applied and whether it is applied consistently. How gaps were dealt with, and how transactions the software could not classify. And which wallets and addresses are included at all.
Responsibility for the accuracy of the return stays with you. The software provider does not stand behind your tax return — that is in their terms, and it reflects the legal position.
The typical weak points
- Wallets not captured. A hardware wallet never connected is missing from the report — and with it the acquisition data for the holdings sitting there.
- Own transfers booked as sales. The single most common error. It creates gains that do not exist and destroys the holding periods at the same time.
- Missing prices. With illiquid assets the software enters zero or a substitute price. Both need checking and, where appropriate, reasoning.
- A change of method between years. Calculating differently in the second year from the first makes a reliable carry-forward impossible.
- Historical data silently changed. A report that retrospectively produces different figures from the one filed is a problem in an audit. So: archive the version filed, do not merely keep access to the software.
We check reports against the raw data before filing and document the deviations. Our review of tax software
When documents are missing: the estimate
What actually happens where acquisition data can no longer be reconstructed.
Where the facts cannot be established, the tax office estimates the tax base under section 162 of the Fiscal Code. The circular sets the estimate two limits that are readily overlooked in practice: it is to come as close as possible to the actual circumstances, and it must not serve to penalise (paragraph 92). Where only isolated details are missing, the documents and data otherwise produced are to be brought into the estimate.
Where the receipt on an exchange is evidenced but the acquisition is not, the estimate is regularly made with acquisition costs of zero. The entire proceeds are then gain. Where the acquisition date is also unevidenced, the exemption after the one-year period falls away too — even though the holdings may in fact have been held for years.
That is not a penalty but the consequence of the burden of proof. Circumstances that reduce the tax must be proved by whoever relies on them.
What can be done about it
- The blockchain is public. Historical transactions can often be reconstructed without exchange records, provided the addresses are known.
- Bank statements evidence payments to and from exchanges and therefore often the timing and the order of magnitude of the first acquisition.
- With insolvent platforms, insolvency administrators hold data. An enquiry is worth making and forms part of securing evidence.
- Where reconstruction remains impossible, your own estimate, disclosed and reasoned, is better than no figure. It moves the argument onto the method — and away from the accusation of having concealed something.
If it comes to an audit, the quality of this preparatory work decides the outcome. Representation in a tax audit
What this means for your records
Six points that make the difference between a defensible return and one open to attack.
Completeness of sources
Every exchange, every wallet, every address — including the one unused for years. A list of every access ever used is the starting point of any preparation.
Keep raw data, not just reports
Exports in the original format, with the date of export. Anyone keeping only the finished report cannot recalculate when a question comes.
Fix the method and keep it
Determine the disposal sequence once, record it in writing and apply it consistently — per wallet or address. A change must be capable of being justified.
Mark your own transfers
Transfers between your own wallets are not disposals. They must be identifiable as such, or phantom gains arise and the holding periods break.
Document foreign platforms at once
Not when the return is prepared. Securing evidence under section 90(2) AO requires obtaining the records while access still exists.
Disclose a differing view
Where you do not follow the administrative view, that belongs in the return — with reasons. It is the most effective protection against an allegation of intent.
- The list of all exchanges, wallets and addresses is complete and kept up to date
- Raw data exports exist in the original format, with the export date
- The version of the tax report that was filed is archived, not merely access to the software
- The disposal sequence is fixed in writing and applied consistently
- Own transfers are marked as such and not booked as disposals
- Records for foreign platforms exist independently of current access
- Departures from the administrative view are named and reasoned in the return
Six questions the circular leaves open
Not every statement in the circular is equally solid. Some of it is in the statute, some is a simplification, a non-objection, or applies expressly only "until further notice". Anyone who tells these apart knows where a position holds and where it is negotiable.
When do staking and lending rewards accrue?
Paragraph 48a: during the year the claiming may be taken as the moment, that is, the credit into the wallet. Crypto assets not yet claimed are nonetheless to be recorded "at the latest at the end of the financial year".
Both are expressly simplifications. The forced accrual at 31 December has no basis in section 11 EStG: what has accrued is what has come within your economic control. Someone who cannot or may not claim does not have that control. For lending, paragraphs 64 and 65 refer to the same rule.
When does the holding period start?
Paragraph 55: with centralised exchanges the times recorded there count; on direct acquisition, "as a rule, for reasons of simplification", the times from the wallet.
But the circular leaves a door open in the same passage: if the underlying contractual obligation is to govern, the date of the contract must be evidenced by suitable documents. On the case law to section 23 EStG that is precisely what matters — not the token movement. On a sale just beyond the one-year mark this difference can decide the entire tax.
An airdrop at market value or at zero?
Paragraph 73: the market price at the time of acquisition is to be applied. Where no market price can be established at that time, entering 0 euros "will not be challenged".
That too is not a legal consequence but a non-objection. What becomes decisive is when a price counts as establishable — thin trading on a single decentralised exchange is not yet a market price. Anyone entering 0 euros should document the state of the market at that date, not merely assert it.
Which daily price applies?
Paragraph 91: instead of the price at the moment of the transaction, daily prices may be used — an average, a fixed-time or a closing price. The condition is consistent valuation: not acquisition costs from the most expensive source and proceeds from the cheapest.
The wording is "until further notice". The authorities therefore expressly reserve the right to withdraw it. Fix your price source and method once in writing and hold to them — documented consistency is the real protection here.
What is a random airdrop?
Paragraphs 29 and 72: covered are, on the one hand, allocation "entirely without any action" by the holder and, on the other, the case where chance decides alongside conduct — the attribution is then "interrupted or overlaid".
How large the element of chance must be, the circular does not say. Is it enough that only some of those eligible succeed? That the amount per recipient was unforeseeable? That gap is the core of our argument in the ENS case. The three tiers
Do the documentation duties apply retrospectively?
Paragraph 106: the circular applies from publication in the Federal Tax Gazette to all open cases. For assessment periods up to and including 2024, however, differing price determinations and records departing from paragraphs 87 et seq. outside the electronic record-keeping principles will not be challenged.
The new standard therefore cannot be applied to earlier years. The cooperation duties of the Fiscal Code always applied — but their concretisation in chapter III only from 2025. In audits of older years this is an argument that is regularly overlooked.
For private assets there is no right of data access. Access under section 147(6) of the Fiscal Code presupposes records subject to retention, and privately those arise only above the threshold in section 147a. Paragraphs 99 and 100 separate this cleanly: direct access to tax software concerns business assets.
What the tax office may do is in paragraph 101: it can request the documents and files used to produce the report, such as transaction summaries or CSV files. That is a request for production under section 97 of the Fiscal Code — directed at particular documents, not at access to an account. Paragraph 100 also makes clear that the general rules on the burden of proof apply.
In practice that means: you produce exports, not credentials. Where a request goes beyond that, it has to be examined for proportionality — and paragraph 101 itself ties that to the authority having exhausted its own means of investigation, through a block explorer for instance.
The circular in full
34 pages, 106 paragraphs. We make both versions available for download, alongside a guide to the paragraphs that are actually needed in practice.
Individual questions on the income tax treatment of certain crypto assets, ref. IV C 1 - S 2256/00042/064/043. A recast of the circular of 10 May 2022 (BStBl 2022 I p. 668).
The English version is a non-binding working translation by the Ministry. The German text governs.
Part of what the circular says in investors' favour is not in the statute but rests on administrative concession. That applies in particular to paragraph 63: under it, the extension of the disposal period to ten years under section 23(1) sentence 1 no 2 sentence 4 EStG is not applied to currency and payment tokens — although on its wording the provision could apply where income is derived from the asset.
An administrative instruction can be changed at any time, including to the taxpayer's detriment and without a transitional rule. Protection under section 176 of the Fiscal Code applies only to the amendment of assessments already issued, not to future years. Anyone relying today on staking or lending holdings being tax free after a year is relying on administrative practice, not on a statutory promise.
Paragraph 63 is only the most conspicuous instance. Six further points likewise rest on simplification or non-objection rather than on the statute.
- Para. 1definition of a crypto asset
- Para. 5NFTs expressly not covered
- Para. 31status as an asset
- Para. 46the concept of a supply — no reciprocity required
- Para. 53private disposal, €1,000 threshold
- Para. 61 – 62disposal sequence, wallet-by-wallet approach
- Para. 63no extension to ten years — concession only
- Para. 65lending in private assets
- Para. 70 – 75airdrops
- Para. 72chance interrupts the attribution
- Para. 74gift as the fallback
- Para. 87 – 92cooperation, tax reports, estimates
- Para. 103what the tax office may request
- Para. 105sec. 147a AO — €500,000, from 2027: €750,000
- Para. 106non-objection up to and including 2024
Questions and answers
Is a ministry circular binding on me?
What changed with the circular of 6 March 2025?
Do I have to keep records as a private investor?
Is a software tax report enough as evidence?
Are airdrops taxable?
Does a KYC procedure turn a random airdrop into a taxable supply?
What is the ENS airdrop and why are you litigating it?
When do staking and lending rewards accrue?
Do I have to hand the tax office my CoinTracking file?
Does the holding period start with the contract or with the token movement?
Could the ten-year holding period still be applied to crypto?
Could an airdrop trigger gift tax instead?
What applies to exchanges outside Germany?
What happens if documents are missing?
Legal position: 25 August 2026. Sources: Federal Ministry of Finance circular of 6 March 2025 (ref. IV C 1 - S 2256/00042/064/043), a recast of the circular of 10 May 2022 (BStBl 2022 I p. 668), in particular paragraphs 46, 61 f., 70 – 75 and 87 – 106; Federal Fiscal Court, 24 April 2012, IX R 6/10; Federal Fiscal Court, 14 February 2023, IX R 3/22; Hamburg tax authority, order of 17 April 2023 (S 2257 – 2022/004) on the 2021 ENS and TNS airdrops; sections 90, 147, 147a, 162 of the Fiscal Code; sections 20(1) no 7, 22 no 3 and 23 of the Income Tax Act.
Cases: BFH VIII R 22/25 (lending, lower court Cologne Tax Court 3 K 194/23), FG Baden-Württemberg 4 K 2402/25 (ENS airdrop), FG Niedersachsen 10 K 165/23 (wallet-by-wallet computation), FG Berlin-Brandenburg 4 V 4039/26 (disposal sequence, suspension granted by order of 12 June 2026). On the status as an asset and on the enforcement deficit see also Nuremberg Tax Court, judgment of 22 January 2025 (3 K 760/22), final.
The assessment of the binding effect, the three tiers for airdrops and the evaluation of individual weak points reflect our own legal view; on the points named it departs from the view of the tax authorities. This article is not advice on an individual case. Where this English text and the German version differ, the German version governs.