Inheriting and gifting crypto assets
A single date that decides the tax, a holding period that carries over, and a key without which the whole estate is worthless — but taxed. German inheritance tax on crypto assets is less a question of rates than of preparation.
- Valuation is at open market value on the valuation date — the date of death, or the date the gift is executed.
- A later price collapse does not reduce the inheritance tax. The tax stays on the value at the valuation date.
- The deceased's holding period carries on: the heir steps into their shoes, section 23(1) sentence 3 EStG.
- Exempt amounts become available afresh every ten years — which makes lifetime gifts the most effective tool.
- Note: the seed phrase never belongs in the will. Wills are opened and notified.
A single day determines the tax
With assets that can halve within a few weeks, that is not a technical detail.
Inheritance tax arises on the death of the deceased, gift tax on the execution of the gift. For determining value, section 11 of the Inheritance and Gift Tax Act makes precisely that moment decisive — the valuation date. What happens afterwards is irrelevant to the tax.
The deceased dies at a market high. On the valuation date the holding is worth 1.2 million euros, and the inheritance tax is measured accordingly. Six months later — the heirs have not yet sold, because the estate has not been distributed — the same holding stands at 400,000 euros. The tax stays.
There is no correction here comparable to that in securities law, and no automatic equitable adjustment. Anyone intending to pay the tax out of the inherited holding has to decide early — waiting is the most dangerous strategy in this area.
What follows for practice
- Establish and document the value at the valuation date at once, not when the return is prepared. Price data is harder to reconstruct reliably later than it appears.
- Estimate the likely tax early and secure the liquidity — through a partial sale if necessary, before the market takes the decision for you.
- Observe the notification duty in section 30 ErbStG: the acquisition must be notified to the tax office within three months of becoming aware of it. That duty exists regardless of whether tax is ultimately payable.
- Where the tax is substantial and the estate illiquid, consider deferral. It is subject to conditions and is not granted of the authority's own motion.
Valuation: open market value, but which price?
The statute sets the standard. You have to determine the price source yourself — and be able to justify it.
For inheritance and gift tax purposes, crypto assets are recognised at their open market value, section 12(1) ErbStG together with section 9 of the Valuation Act. The open market value is the price obtainable on a sale in the ordinary course of business. The special rule for securities with an official exchange price does not apply — crypto assets are not traded on a securities exchange within the meaning of that provision.
From the price at a liquid trading venue on the valuation date. What works in practice: pick one source, keep it for every asset and every valuation date in the same case, fix the moment within the day, and document the retrieval with date and time.
With illiquid assets — small tokens, NFTs, positions with no continuous trading — the open market value has to be estimated. Here the reasoning matters more than the figure: a value derived traceably will withstand an audit; one plucked from the air will not.
The special cases
- NFTs and collections. A collection's floor price is an indication, not the value of the individual piece. For significant positions a valuation opinion comes into question. Our expert opinions
- Locked holdings. Vesting, lock-ups or bonded staking positions are not freely available on the valuation date. Whether and how that reduces value is a question of the individual case and belongs, with reasons, in the return.
- Crypto assets held as business assets. Here the rules for business assets apply. The reliefs for business property, however, only bite so far as the assets are not administrative assets — merely holding a position is regularly not favoured. Anyone relying on that should have it examined beforehand.
- Liabilities of the estate. The costs of administering the estate are deductible. That can include the costs incurred in establishing access to the holdings at all.
Exempt amounts and tax classes
The frame within which every arrangement operates — and which renews itself every ten years.
| Recipient | Tax class | Exempt amount | Rate |
|---|---|---|---|
| Spouse, registered civil partner | I | €500,000 | 7 – 30 % |
| Children, stepchildren including children of deceased children |
I | €400,000 | 7 – 30 % |
| Grandchildren where the parents are living |
I | €200,000 | 7 – 30 % |
| Parents and grandparents on an acquisition on death |
I | €100,000 | 7 – 30 % |
| Siblings, nieces, nephews, children-in-law | II | €20,000 | 15 – 43 % |
| Everyone else including unmarried partners, who receive no privileged treatment whatever under German law |
III | €20,000 | 30 – 50 % |
Under section 14 ErbStG, several acquisitions from the same person within ten years are aggregated. Put the other way: once ten years have passed, the exempt amount is available in full again. With two children and both parents as donors, that is 1.6 million euros per ten-year period — free of tax.
Anyone whose crypto holdings have risen sharply and who only starts structuring on death has already lost that lever. The best moment for a transfer is regularly the one at which the value is low — not the one at which it becomes urgent.
German law grants an unmarried partner no privileged treatment of any kind, however long you have lived together and whether or not you have children in common. There is no statutory right of succession, and for tax purposes the partner falls into class III with an exempt amount of 20,000 euros and rates from 30 per cent. On a crypto holding of 500,000 euros that is a six-figure tax charge where a spouse would have paid nothing.
Several jurisdictions treat cohabiting or de facto partners far more generously, which is why this regularly comes as a surprise. If crypto assets are to pass to a partner you are not married to, the arrangement has to be built deliberately — and long before it becomes urgent.
On top of these come exemptions for particular assets, such as the special maintenance allowance for spouses and children. They are easily overlooked with crypto assets, because these are neither household effects nor a family home — but they are available regardless.
The second tax: income tax for the heir
Inheritance tax and income tax are two separate systems. They can catch the same transaction one after the other.
The gratuitous transfer triggers no income tax. It is not a disposal within section 23 EStG, and it is not an acquisition by the heir either.
Instead the step-into-the-shoes principle applies: under section 23(1) sentence 3 EStG, the acquisition by the predecessor is attributed to the successor in title. The heir takes over the deceased's acquisition date and acquisition cost — and with them the holding period in the state it is in.
Where the deceased held the assets for more than a year, the heir can sell them immediately free of income tax. Where the acquisition was only a few months earlier, by contrast, the period keeps running for the heir — a sale before it ends is taxable, and taxable by reference to the original acquisition cost of the deceased, not to the value at the valuation date.
That is precisely where the double burden arises: the heir is taxed on an increase in value that arose before the death and has already borne inheritance tax. Section 35b EStG mitigates this where the acquisition was on death and the sale falls in the same or one of the four following assessment periods.
- On deathneither a disposal nor an acquisition
- Sec. 23(1) s. 3the deceased's acquisition is attributed
- Holding periodcarries on, is not restarted
- Acquisition costthe deceased's, not the value at the valuation date
- Sec. 35b EStGa reduction on an acquisition on death
- Giftssec. 35b EStG does not apply
For the heir the first consequence is this: they need the deceased's acquisition data. Without it neither the exemption can be evidenced nor the gain correctly computed — and it gets estimated. On the evidential duties
The access problem
The point at which crypto assets differ from every other item in an estate.
A bank account passes to the heirs, and the bank executes their instructions. A property is transferred on the register. With self-custodied crypto assets there is nobody to execute anything. There is only the private key — and anyone who does not have it has nothing, whatever the certificate of inheritance says.
In law the assets pass to the heirs on death. Inheritance tax arises with it and is measured by the value at the valuation date. That the heirs cannot in fact reach the assets does not, at first, change that.
Where the inaccessibility is permanent and can be evidenced, it is arguable whether there is an asset capable of achieving any price at all in the ordinary course of business — and alongside that, applications for equitable relief remain open. Both are laborious, uncertain in outcome, and presuppose that the inaccessibility can be proved. With a lost key that is hard.
Where a provider holds the assets
Where the holdings sit with an exchange or a custodian the position is easier, but not easy. The provider releases them against proof of succession. In practice, with foreign platforms that frequently takes months, requires certified and translated documents, and occasionally fails on two-factor procedures tied to a device belonging to the deceased. Here too, the market does not wait.
For family members facing this, the first step is a complete inventory — which access points existed at all. On source of funds evidence for banks and custodians
Organising the estate
Five steps that cost little during your lifetime and decide the whole of the assets when it matters.
Keep a register of access points
Which exchanges, which wallets, which addresses, which devices. Without keys, only the structure. For family members this register is often worth more than any legal arrangement — it tells them what to look for in the first place.
Arrange access separately from the will
The will determines who is to inherit. It is opened by the probate court and notified to those concerned — key material has no place there. Access is deposited separately: with a notary, in a safe deposit box, split between several custodians, or through a multi-signature arrangement requiring several people to act together.
Pass on the acquisition data too
The heirs need acquisition dates and acquisition costs, or they lose the exemption for holdings that were in fact held for years. A maintained schedule together with the raw data is part of the estate — and one of the cases in which tax records have real value.
Plan liquidity for the tax
Inheritance tax is payable in euros, and soon. Where the whole estate consists of crypto assets, the heirs have to sell — possibly at the worst moment. Anyone who foresees this can set liquid funds aside for the purpose.
Review the arrangement when something changes
New hardware, a new exchange, a new procedure, changed family circumstances. An estate arrangement for crypto assets goes out of date faster than any other — it depends on technology that changes every few years. An annual review is enough.
Gifts as a structuring tool — and where they break
Transferring during your lifetime is the most effective tool. It has four typical points of failure.
The date of execution is unclear
A gift is executed once the recipient has control — with crypto assets, regularly on transfer to an address over which they alone have control. Where the donor retains joint control, the gift is not executed, and the exempt amount is not used but wasted.
The notification is not made
A gift too must be notified under section 30 ErbStG, within three months — regardless of whether tax arises after the exempt amount. Failing to do so risks the whole transaction appearing in an unfavourable light if it later comes out.
The value flows back
Where the exempt amount is used and the value then in fact returns — because the donor goes on trading and disposing, for instance — there was no gift. Arrangements of that kind do not survive an audit and additionally found the accusation of having misled the tax office.
The inherited holding period is overlooked
The recipient steps into the donor's shoes too. Selling shortly after the gift, while the donor's period is still running, makes the gain taxable — computed with the donor's acquisition cost. Anyone transferring the value has to transfer the data with it.
What is transferred is the value at the valuation date. A gift made when the price is low therefore transfers the same quantity at a fraction of the tax base — the later increase in value then arises in the recipient's hands and is no longer caught in the donor's estate.
That is not speculation on prices but a question of sequence: anyone planning a transfer anyway should not defer it to a market high. And anyone carrying it out after a collapse is making use of a situation they did not wish for.
- The transfer is made to an address over which the recipient alone has control
- The transaction is documented with date, quantity, price and transaction evidence
- The notification under section 30 ErbStG was made within three months
- Earlier gifts from the same person within ten years are recorded
- Acquisition dates and acquisition costs have been handed to the recipient
- There is no arrangement for a return of the value or for continuing control by the donor
Questions and answers
At what value are crypto assets recognised on death?
What happens if the price collapses after the date of death?
Does the deceased's holding period keep running?
Does tax arise twice — inheritance tax and income tax?
What if nobody knows how to reach the wallet?
Does the seed phrase belong in the will?
When is a gift of crypto assets executed?
Legal position: 25 August 2026. Sources: sections 9, 11, 12, 14, 16, 19 and 30 of the Inheritance and Gift Tax Act; section 9 of the Valuation Act; sections 23(1) sentence 3 and 35b of the Income Tax Act; sections 163 and 227 of the Fiscal Code.
The assessment of how permanently inaccessible holdings are to be valued, and of the treatment of locked positions, reflects our own legal view. This article is not advice on an individual case; the drafting of the succession arrangements themselves belongs with a notary or a lawyer. Where this English text and the German version differ, the German version governs.