Appearing on the market as a dealer
Offering services to third parties, advertising, trading under a business name. Anyone who visibly wants to be a market participant will be treated as one.
Sec. 15(2)
Service · Legal position 08/2026
A trade, or private asset management?
The point on which everything else turns. If your activity is classified as a trade, you lose not only the exemption after the one-year period — bookkeeping duties, valuation rules and the treatment of losses all change with it.
The essentials
- The number of transactions alone does not create a trade — behaviour typical of a dealer does.
- On the administrative view, borrowing alone does not create a trade; the case law on securities dealing is stricter.
- Professional proximity to the crypto sector is an indicator taken into account in the overall assessment.
- The core problem is not trade tax but the loss of the exemption after one year.
- For property companies, after the Federal Fiscal Court's judgment of 24 July 2025, merely holding an investment is enough to lose the extended deduction entirely.
- Partnerships face the additional risk of infection under section 15(3) no 1 EStG.
Why this question decides everything else
Held privately, gains on the disposal of crypto assets are tax free after one year. Held as business assets, that period does not exist. Every gain is taxable, however long the coins were held.
Someone who has built holdings over years and is then classified as trading retrospectively does not lose a benefit going forward — they lose the exemption for the entire stock of unrealised gains. This is regularly the single most expensive point in a crypto tax audit.
What else changes
- Bookkeeping or record-keeping duties, with all their formal requirements
- Valuation under commercial and tax accounting rules instead of section 23 EStG
- Loss relief under different rules — in part more favourable, in part narrower
- Liability to trade tax and, for partnerships, possible infection
- Wider exposure to audit: a field audit is then permissible without special justification
The classification does not follow from what you declare but from the actual circumstances. Anyone wanting to influence it has to do so through their conduct and its documentation — not by ticking a box on a form.
The criteria: drawn from securities dealing
For crypto assets, the assessment follows the case law on dealing in securities and foreign exchange. Its central proposition surprises many people.
Volume alone is not enough
On settled case law, buying and selling securities does not become a trade even at considerable volume and high frequency, so long as it is a restructuring of one's own assets. Someone dealing for their own account who does not appear on the market as a dealer stays in the private sphere — even across thousands of transactions.
Trading for the account of others
Managing other people's holdings, pooling third-party capital, managing money for friends and family for a share. This is the clearest step out of asset management — and it also engages financial regulation.
An organisation typical of a dealer
Dedicated premises, employed staff, professional trading infrastructure, proprietary systems connected to several venues.
Automation on its own
Trading bots and scripts are available to private investors too. On their own they do not create a trade — combined with other features, they can sharpen the picture.
What decides is always the overall assessment. That is why the question cannot be answered with a checklist, but it can be answered with a documented classification that will withstand a later audit. That is what we prepare.
Borrowing: the favourable administrative view
On debt financing the tax authorities depart from the case law — in the taxpayer's favour.
The position
Under the administrative position on crypto assets, taking on debt does not by itself create a trade. In the case law on securities dealing, by contrast, debt financing is treated as an indicator of dealer-like behaviour.
We treat this as a concession on equitable grounds: an administrative view favourable to the taxpayer, which can be relied on in the assessment procedure, but which replaces neither the statute nor the case law.
What follows in practice
- While the administrative view stands, debt financing is harmless in itself — and should be used where it makes commercial sense.
- It should not be relied upon: a concession can be withdrawn, and in litigation the statute applies as the courts construe it.
- Where further indicators arise — the account of others, organisation, appearance on the market — debt financing becomes relevant again in the overall assessment.
Professional proximity to the crypto sector
A point rarely discussed, and one that nonetheless comes up regularly in audits.
Someone professionally involved with crypto assets has knowledge, access and sometimes infrastructure that an ordinary investor does not. That does not make them a trader automatically — but it changes the starting position of the assessment.
Typical constellations
- Employees of trading platforms: market knowledge, and sometimes access to data or terms not open to others.
- Developers in the crypto sector: their own trading systems, connections, technical understanding of the protocols.
- Advisory and brokerage roles: anyone advising on crypto professionally while trading privately has to keep the spheres cleanly apart.
- Project participants: holding the tokens of a project you contribute to raises further questions, including that of prior knowledge.
What we recommend: document the separation — separate accounts, separate addresses, no use of work infrastructure for private holdings, no management of other people's assets. In an audit this documentation is worth more than any explanation given afterwards.
Trade tax is not the real problem
The worry usually attaches to the wrong tax.
Sec. 35 EStG
Trade tax is largely credited
For individuals and partnerships, trade tax is credited against income tax on a flat basis. Depending on the municipal multiplier, the actual additional burden stays modest or falls away almost entirely — in municipalities with a high multiplier a residue remains.
Sec. 23 EStG
The core problem: no holding period
Business assets have no holding period. What would have been tax free after a year in private hands is fully taxable in a business — with holdings built up over years, that is by far the larger sum.
And the classification does not take effect from the assessment onwards, but for the years in which the conditions were actually met.
Anyone approaching this question purely from the trade tax angle therefore underestimates it considerably.
Warning: crypto assets inside a property company
The most expensive mistake we see in this area — and since a Federal Fiscal Court judgment of July 2025 the position is clear.
The extended deduction demands exclusivity
Property-holding companies may, under section 9 no 1 sentence 2 of the Trade Tax Act, deduct the trade income attributable to managing and using their own real property — in effect a substantial relief from trade tax. The condition is that they manage exclusively their own real property and, alongside it, at most their own capital assets. The activities permitted in addition are listed exhaustively in the statute.
A breach of that exclusivity requirement leads to the complete denial of the extended deduction — not a proportionate reduction for the harmful part, but its loss for the entire trade income including all rental income.
And merely holding is enough
The Federal Fiscal Court held on 24 July 2025 (III R 23/23) that a secondary activity not expressly permitted can cause the exclusion even where it produces no income whatsoever. In the case decided, a property company held two classic cars as an investment, without any income from them. That was enough to lose the extended deduction for five assessment periods.
Applied to crypto assets: no trading, no staking and no sale is needed. Holding a position with a view to appreciation may already suffice.
- DecisionBFH, judgment of 24 July 2025, III R 23/23
- Lower courtBaden-Württemberg Tax Court, 28 March 2023, 6 K 878/22
- Years at issue2016 to 2020
- Hoped-for benefitconsolidating crypto in an existing structure
- Actual consequenceloss of the deduction for all rental income
- Reversible?for the years affected, generally not
The obvious objection — that crypto assets are capital assets and therefore permitted — does not hold on this case law. Capital assets within the meaning of the provision are only those whose use can produce investment income. Crypto held privately produces income under section 23 or section 22 EStG, not under section 20.
Whether that changes if the Federal Fiscal Court reaches a section 20 classification in the lending case we are conducting is an open question, and one not yet discussed. Nobody should rely on it at present.
The solution is simple
If crypto assets are to be held in a corporate structure, they belong in a company of their own — not in the one holding the real property. That separation costs the formation of one further entity and saves a relief worth five or six figures a year on any substantial property portfolio.
Partnerships: the infection rule
Partnerships carry a risk of their own. Under section 15(3) no 1 of the Income Tax Act, the activity of a partnership counts in its entirety as a trade if it carries on a commercial activity even in part. A small commercial element therefore infects the whole of the income.
The courts have developed a de minimis limit, but it is a low one: it attaches both to a share of net turnover and to an absolute ceiling. Both limits have to be observed.
Where this arises in crypto
- An asset-holding partnership takes up crypto trading that crosses the threshold into a trade.
- A professional partnership holds and trades crypto assets through the firm.
- A property co-ownership receives staking income through the partnership's assets.
In every case the recommendation is the same as for the property company: crypto belongs in a separate entity. The separation is simple in advance and barely repairable afterwards.
Aside: tokenised property and the three-property threshold
A risk becoming practical with tokenised property offerings — from Dubai among other places.
For real property the courts developed the three-property threshold: someone who acquires and disposes of more than three properties within roughly five years is generally carrying on a trade in real property. It is an indicator rather than a rigid limit — but a powerful one.
Tokenised property offerings raise a question that is barely discussed so far: what counts as a property in this context? Someone acquiring and disposing of interests in several tokenised properties may cross the threshold of three very quickly — even where the amount invested is economically modest.
The questions that converge here
- Is the token an interest in the land, a participation in a company, or a contractual claim? The classification follows from that.
- Does each token count as a property, each property as a property — or neither?
- What effect does a foreign structure have, and which treaty applies?
- Is a trade under the general criteria in play alongside the trade in real property?
There is no reliable case law on this yet. Anyone investing in such offerings should not treat them as a purely crypto investment — the property-specific rules can apply alongside and remove the exemption regardless of any holding period.
Questions and answers
How many trades make me a trader for tax purposes?
There is no number. On the case law developed for securities dealing, volume alone makes no one a trader — not even at very high frequency. What matters is whether you behave like a dealer: appearing on the market as one, acting for the account of others, using an organisation typical of a dealer. Someone merely restructuring their own assets normally stays in the private sphere.
Does borrowing make me a trader?
On the administrative view, no. That is notable, because the case law on securities dealing does treat debt financing as an indicator. The tax authorities are therefore more favourable here than the courts — we treat this as a concession on equitable grounds: something you can rely on in the assessment procedure, but not a substitute for a statutory rule.
I work at an exchange or develop in the crypto sector. Is that a problem?
It is an indicator the tax authorities can take up. Someone professionally involved with crypto assets has knowledge, access and sometimes infrastructure beyond what a private investor has. The overall assessment still decides — but the starting position is different, and documenting the separation between work and your own assets becomes more important.
Is trade tax really the main problem?
Usually not. For individuals and partnerships, trade tax is largely credited against income tax under section 35 of the Income Tax Act, so the additional burden stays limited depending on the municipal multiplier. The real problem is elsewhere: business assets have no holding period. The exemption after one year disappears entirely.
Can I put crypto into my property GmbH?
We strongly advise against it without a prior review. The extended deduction under section 9 no 1 sentence 2 of the Trade Tax Act requires that the company manage exclusively its own real property. Any activity beyond that can remove the relief entirely — not proportionately, but altogether. The Federal Fiscal Court held on 24 July 2025 (III R 23/23) that merely holding an investment asset is enough for this, even where it generates no income at all. The tax damage regularly exceeds the hoped-for benefit many times over.
What happens with a partnership?
There the infection rule in section 15(3) no 1 of the Income Tax Act applies: a partly commercial activity can make the whole of the partnership's income commercial. The courts recognise a de minimis limit, but it is a low one. For asset-holding partnerships with crypto holdings this is a real risk.
Responsible for content: Matthias Steger, German certified tax advisor (Steuerberater), nine years as a tax auditor, author of the handbook on the taxation of crypto assets.
Legal position: 25 August 2026. Sources: sections 15(2) and 15(3) no 1, 23 and 35 of the Income Tax Act; section 9 no 1 sentence 2 of the Trade Tax Act; BFH, judgment of 24 July 2025, III R 23/23; and the Federal Ministry of Finance circulars on the income taxation of crypto assets.
The classification always turns on the circumstances of the individual case. The section headed as an aside sets out an assessment of a question that remains unresolved. Where this English text and the German version differ, the German version governs.
Legal position: 25 August 2026. Sources: sections 15(2) and 15(3) no 1, 23 and 35 of the Income Tax Act; section 9 no 1 sentence 2 of the Trade Tax Act; BFH, judgment of 24 July 2025, III R 23/23; and the Federal Ministry of Finance circulars on the income taxation of crypto assets.
The classification always turns on the circumstances of the individual case. The section headed as an aside sets out an assessment of a question that remains unresolved. Where this English text and the German version differ, the German version governs.