The same invoice can be fully deductible against one category of income and entirely blocked against another. Anyone entering costs into the return without sorting them either gives up deductions or invites a reduction.
Before an invoice is attributed, it has to be settled which category of income it belongs to. Everything else follows from that.
Staking, lending, airdrops. Here the general rules in section 9 EStG apply: what is deductible is whatever is occasioned by the earning of the income. No special prohibition, no restriction to individual transactions.
Note: where the expenses exceed the receipts, the loss can only be offset to a limited extent — against surpluses of the same kind.
The gain is the disposal proceeds less the acquisition cost and the deductible expenses. What is deductible is what is occasioned by the taxable disposals. Evidence is easiest for the costs of a single transaction; ongoing expenditure comes into question so far as it serves the earning of taxable disposal gains.
Note: on top of that comes the block in section 3c(1) EStG for the tax-free part.
For derivatives and certain fund and ETP products, section 20(9) EStG applies: deducting the actual expenses is excluded. Everything is covered by the savers' allowance — regardless of how high the costs actually were.
Note: even a large legal bill for structuring a futures position is therefore without effect. The Federal Fiscal Court has read the prohibition widely: it applies to expenditure paid after 2008 but connected with income received earlier, and equally within the comparison against the personal rate (judgment of 2 December 2014, VIII R 34/13). The only remaining route is equitable relief under sections 163 and 227 of the Fiscal Code, to which the senate expressly pointed.
This three-way split is why clean attribution of the transactions pays off on the cost side too: the same legal invoice is fully deductible under section 22 no 3 EStG and worthless under section 20 EStG.
The most important prohibition for crypto assets. Someone selling free of tax after the one-year period earns no taxable receipts to that extent. Costs standing in a direct economic connection with that are not deductible. For an investor with a mixed holding that means: apportion.
For investment income, deducting actual expenses is excluded. The savers' allowance is all that remains. For crypto derivatives and fund products that means advisory, custody and software costs have no effect.
Expenditure on private life is not deductible, even where it is useful to the professional activity. Where the occasioning is mixed, apportionment is permissible only if there is an objective basis — which is where conference travel and specialist literature for private investors regularly fail.
With advisory costs what matters is the step of work, not the occasion. Deductible are the steps taken to compute the income — assembling the income from documents and transaction data. Not included are completing the return and, with a voluntary disclosure, everything serving to secure immunity from prosecution.
That the advisory costs of a voluntary disclosure can in principle be deductible expenses was not questioned by the Federal Fiscal Court (judgment of 2 December 2014, VIII R 34/13). It refused the deduction in the case decided solely because the income was investment income, where section 20(9) EStG applies.
Not a prohibition on deduction in the narrow sense, but almost as effective in practice: where the expenses exceed the receipts from supplies, the loss cannot be offset against other income, only against surpluses of the same kind in other years.
Almost every crypto investor has taxable and tax-free disposals in the same year. Section 3c(1) EStG therefore arises in practice almost always.
The statute prescribes no key. What is required is a basis that does justice to the facts and is reasoned traceably. Candidates are:
— the ratio of taxable to total disposal proceeds
— the ratio of the number of transactions
— the actual work involved, with advisers' invoices for instance
What matters is less the choice of basis than the reasoning for it and its consistent application. A key that changes from year to year and always produces the most favourable result will not be accepted.
A practical point: ask advisers to invoice separately by category of income. What is already separated on the invoice does not have to be estimated later — and it holds up in an audit.
An investor with taxable and tax-free sales in the same year, apportionment key 40 per cent taxable. The classification shows how differently comparable amounts work out.
| Expense | Amount | Category | Assessment |
|---|---|---|---|
| Crypto tax software, annual licenceAn aid to computing the income. To be apportioned between the categories of income and, within section 23 EStG, between taxable and tax-free disposals. | €159.00 | Sec. 23 and 22 no 3 | apportion |
| Tax adviser, computing sec. 22 no 3 incomeThe costs of computing income are deductible. Only the part attributable to completing the return itself would not be. | €599.00 | Sec. 22 no 3 | deductible |
| Tax adviser, computing sec. 23 incomeAlso computation of income — but only so far as attributable to taxable disposals. The part attributable to tax-free sales is blocked by section 3c(1) EStG. | €589.00 | Sec. 23 | apportion |
| Solicitor, OTC contract within the holding periodDirectly occasioned by a single, taxable disposal. Fully deductible as a cost of that transaction. | €299.00 | Sec. 23 | deductible |
| Solicitor, structuring a lending arrangementOccasioned by the earning of ongoing income. Deductible against other income — no prohibition applies there. | €2,959.00 | Sec. 22 no 3 | deductible |
| Solicitor, futuresFor investment income, deducting actual expenses is excluded by section 20(9) EStG. Everything is covered by the savers' allowance. | €899.00 | Sec. 20 | blocked |
| Deposit feesNot deductible expenses but incidental acquisition costs. They increase the acquisition cost and take effect only on disposal — but then independently of section 3c. | €138.00 | Sec. 23 | acquisition cost |
| Withdrawal feesCosts of disposal. Deductible so far as attributable to taxable disposals. | €438.00 | Sec. 23 | apportion |
| Transfer fees between your own walletsNot a disposal, and therefore not attributable to any single transaction. A deduction comes into question at most proportionately, and needs reasoning. | €57.00 | unclear | apportion |
| Flight to an industry conferenceFor a private investor regularly not deductible, because there is no occasioning by a particular source of income. Different where there is a trade or a professional connection. | €259.00 | mixed | contentious |
| Hotel during the conferenceAs with the flight. Where the occasioning is mixed, apportionment is permissible only if there is an objective basis for it. | €438.00 | mixed | contentious |
| VIP access to the conferenceA private element is not readily apparent in VIP access — it primarily buys access to talks and to people. But the amount stands out and, in our experience, gets questioned. Anyone claiming it should be able to evidence the professional occasion: the programme, the meetings held, the business relationships that came of it. | €999.00 | mixed | contentious |
| Specialist bookDeductible only where the content specifically serves the earning of income and is not of general education. Keep the receipt showing the title. | €19.99 | mixed | contentious |
| Specialist periodicalsThe same test as for a book. General business or investor magazines are regularly not accepted by the authorities. | €69.00 | mixed | contentious |
| Internet costs, €15 × 12Deductible proportionately. For telecommunications costs the authorities usually accept a share of 20 per cent, capped at 20 euros a month — the basis has to be reasoned. | €180.00 | mixed | apportion |
| ComputerWork equipment, deductible in proportion to the extent of use for earning income. For computer hardware the authorities allow a useful life of one year. | €899.00 | work equipment | apportion |
| Three monitors at €199 eachAs with the computer. With three monitors the authorities will ask why — the reasoning should exist beforehand. | €597.00 | work equipment | apportion |
| DeskFurniture in private living space regularly has a private element. As a rule deductible only within a home office that is recognised for tax purposes. | €199.00 | work equipment | contentious |
| Total of the expenditure listed | €9,796.99 | of which actually effective: considerably less | |
Only a fraction of the amounts listed has any effect. The largest single item — the legal bill for the lending arrangement — is fully deductible, because it belongs to other income. The second largest, the solicitor for the futures, is entirely worthless, because section 20(9) EStG applies. And with the VIP conference access the documentation decides: no private element is apparent, but the size of the amount invites questions.
Knowing these differences before instructing anyone allows them to be built into the arrangement — by scoping advice so that it belongs to a category of income where a deduction is available, for instance.
Contentious does not mean impermissible. It means: the position is arguable, but it stands out and in our experience gets questioned. The difference between a deduction allowed and one struck out rarely lies in the law with these items; it lies almost always in the documentation — and that has to come into existence when the money is spent, not when the question arrives.
The classifications are illustrative and reflect our assessment. They do not replace an examination of the individual case; different facts lead to different results.
Six habits that secure the deduction — and none of them costs anything.
Whether advice belongs to section 22 no 3 EStG or to section 20 EStG is decided by the engagement, not by the invoice. Thinking about the scope beforehand decides the deductibility.
Where expenses are cut, the reasoning is in the assessment. The claim can often be saved with an apportionment calculation submitted afterwards — but only within the appeal period. The appeal procedure
The area where most investors are too cautious — and where a little preparation recovers the most.
For a long time the principle was that a trip is deductible only where it was exclusively or almost exclusively professionally occasioned. The Grand Senate of the Federal Fiscal Court abandoned that in 2009: section 12 no 1 sentence 2 EStG contains no general prohibition on apportionment and deduction. Travel costs with mixed occasioning can be apportioned where the professional and private elements can be separated and neither is of subordinate significance.
Industry conferences in the crypto sector typically meet the substantive requirements without difficulty: a dense programme of talks over several days, a professional audience, no general-interest elements. Anyone arriving and departing on the days of the event and keeping the programme has met the essential conditions.
The sticking point lies elsewhere: for private investors, the occasioning by a particular source of income has to be set out. Someone earning ongoing income under section 22 no 3 EStG has a far easier task than someone who merely holds positions.
For travel to and from the event, the ratio of time applies. Accommodation costs, by contrast, are attributed by day — the authorities generally accept no percentage here. Conference and congress fees are separable from the other travel costs and fully deductible where there is a professional occasion. Additional subsistence expenses may only be claimed at the statutory flat rates.
A conference in Barcelona runs for four days with a full programme; there are two travel days and two days of stay with no programme. Six of the eight days are therefore professionally occasioned, a share of 75 per cent. Of a flight costing €259, around €194 would be claimed; accommodation is claimed for the four conference days and the travel days, not for the other two. The conference fee is unaffected and fully deductible.
A practical point: arrange the trip so that no apportionment is needed. Arrive the day before, leave the day after the programme ends, add no holiday days — and the discussion disappears entirely.
An overview of how typical expenditure is classified. Apportion means: deductible in principle, but to be split. Contentious means: arguable, but questioned in our experience. The overview concerns expenditure relating to private assets; for business assets the rules on business expenses apply and are in many respects more favourable.
Not deductible since 2006. Ask for the invoice to separate this out.
blockedDeductible expenses of the relevant category of income. Under section 23 EStG, to be apportioned under section 3c.
apportionSo far as occasioned by the earning of other income. Gas costs for the claim are attributable.
apportionSubscriptions to analytics platforms are deductible only where there is a specific connection to earning income; their proximity to general market information tells against it.
contentiousOnly where there is a specific connection to earning income. Document the title and content.
contentiousSmall amounts, but deductible so far as occasioned. Keep the receipts.
apportionWork equipment. For hardware the authorities allow a useful life of one year.
apportionSeparable from the other travel costs and fully deductible where there is a professional occasion.
deductibleThe costs of an appeal or of litigation are expenses of the category of income in dispute — under section 23 EStG apportioned under section 3c.
apportionExpenditure on defending criminal tax proceedings is regularly not deductible. Exceptions arise only in narrowly limited cases.
blockedDeductible under section 22 no 3 EStG; under section 23 EStG only where transaction-related; under section 20 EStG blocked.
apportionProportionately, so far as the holdings concerned serve the earning of taxable income.
apportionNot deductible expenses but incidental acquisition costs. They increase the acquisition cost.
acquisition costIn private living space this regularly has a private element.
contentiousProportionately, by actual consumption, ideally through a sub-meter.
apportionWith surplus income only to a limited extent, and with evidence of who attended.
contentiousTo be treated like crypto tax software: an aid to computing income, to be apportioned.
apportionThey follow the category of income the opinion serves to clarify.
apportionTo be taken into account proportionately — depending on the occasion, within section 22 no 3 or section 23 EStG. What matters is which transaction the withdrawal belongs to.
apportionTo be treated like tax advice on computing income and apportioned accordingly.
apportionDepending on the occasion, incidental acquisition costs or costs of disposal; with rewards, deductible expenses.
apportionProportionately, so far as used to store holdings that produce taxable income.
apportionOnly under the narrow statutory conditions. Rarely available to private investors.
contentiousProportionately, so far as the insured holdings serve the earning of taxable income. Contentious with purely private custody.
apportionAncillary tax charges relating to income tax are not deductible under section 12 no 3 EStG.
blockedOnly so far as attributable to taxable income. Blocked under section 20 EStG.
apportionProportionately. The usual figure is 20 per cent of the cost, capped at 20 euros a month.
apportionProportionately as travel costs, so far as they serve the computation of taxable income. The commuting allowance does not apply here.
apportionLikewise ancillary tax charges and therefore excluded from deduction.
blockedDirectly occasioned by a taxable disposal.
deductibleAttributable to section 20 EStG. The deduction is blocked by section 20(9) EStG.
blockedOccasioned by ongoing income under section 22 no 3 EStG. Fully deductible.
deductibleUnder section 22 no 3 EStG a deduction is available, because the loss is connected with income that was to be earned — with holdings deployed for staking or lending, for instance. Under section 23 EStG there is no disposal, so the question arises differently. In both cases everything turns on evidencing the date, the amount and the event.
apportionFor private investors regularly with a private element; unproblematic where there is a trade.
contentiousWhere mining is not a trade, only proportionately and with evidence of use.
contentiousWork equipment, proportionately by the extent of use for earning income.
apportionNot deductible expenses but incidental acquisition costs of the token acquired.
acquisition costAs with books. General investor magazines are regularly not accepted.
contentiousTo be treated like crypto tax software.
apportionLike a forensic reconstruction of the history: costs of computing income, apportioned accordingly.
apportionPrivately occasioned. There is no connection with earning income from crypto assets.
blockedProportionately. An account kept exclusively for crypto transactions is far easier to attribute than a private current account.
apportionGood prospects where exclusive use is evidenced. The separation should be documented from the outset.
apportionProportionately, so far as the node serves the earning of income. Where it is used purely to follow your own transactions there is no income and therefore no deduction.
apportionDeductible proportionately, so far as they serve the earning of taxable income. The part attributable to tax-free disposals stays out under section 3c(1) EStG.
apportionAn aid to computing income. To be apportioned between the categories of income and under section 3c EStG.
apportionDirectly occasioned where you speak yourself.
deductibleRegularly serves not the earning of income but a private purpose such as a financing application.
contentiousOnly at the statutory flat rates and only where travel is professionally occasioned.
apportionThe payment to the public purse is not deductible.
blockedOnly so far as attributable to the earning of income, not to private payments.
contentiousDeductible proportionately, so far as they serve the earning of taxable disposal gains under section 23 EStG. No deduction, however, so far as they relate to income within section 20 EStG or so far as only gains outside the one-year period are affected — section 3c(1) EStG applies to that extent.
apportionGeneral personal development is not deductible.
blockedDeductible where the occasioning is almost exclusively professional, otherwise proportionately. See the section on travel costs.
apportionNot a disposal, and therefore not attributable to any transaction. A deduction needs reasoning.
contentiousCosts of computing income, apportioned accordingly.
apportionSee the separate section. Apportionment by time is possible.
apportionArguable, but it stands out. Document the professional occasion.
contentiousThe part attributable to computing the income is deductible — assembling the income from documents and transaction data, for instance. What is not included is the part attributable to completing the return and to securing immunity from prosecution. With crypto assets within sections 22 no 3 and 23 EStG the computation element stays deductible; for investment income, by contrast, section 20(9) EStG blocks it (Federal Fiscal Court, 2 December 2014, VIII R 34/13). The invoice should show the two separately.
apportionDeductible proportionately, so far as they protect the access points and holdings used to earn income. The private share has to be taken out.
apportionCosts of disposal, to be apportioned under section 3c(1) EStG.
apportionThe overview reflects our assessment for the standard case. It does not replace an examination of the individual case — with the items marked contentious in particular, the documentation decides.