Bitcoin in Germany: Legal Status, Tax Rules and the Right to Self-Custody

Bitcoin is legal to own and to self-custody in Germany. German tax authorities treat it as an asset, not as a currency, and a private sale is tax-free once the Bitcoin has been held for more than one year. Businesses that hold or exchange Bitcoin for customers need authorization under EU law, supervised by BaFin; an individual holding their own Bitcoin needs no license.

Yes. German and EU rules regulate the businesses that serve Bitcoin users, not the act of owning Bitcoin.

BaFin’s guidance notice of 3 January 2025, section II.3, states that dealing purely for one’s own account needs no authorization, because the regulated service requires a contract with and for clients.

Bitcoin is not money in the legal sense. In paragraph 3 of its letter of 6 March 2025, the Bundesministerium der Finanzen (Federal Ministry of Finance, BMF) notes that currency tokens such as Bitcoin are not issued or guaranteed by a central bank and lack the legal status of a currency.

Bitcoin is not a “thing” under the German Civil Code. § 90 of the Bürgerliches Gesetzbuch (BGB, Civil Code) states that things in the legal sense are only physical objects.

Bitcoin has no physical form, so the BGB rules on ownership of movable things do not attach to it the way they attach to a gold coin.

Tax law fills part of the gap. Relying on the Bundesfinanzhof’s judgment of 14 February 2023 (IX R 3/22, BStBl II 2023 p. 571), paragraph 31 of the BMF letter treats Bitcoin, like every other “Kryptowert,” as a “Wirtschaftsgut” (an asset capable of independent valuation).

Under paragraph 32 of the same letter, the “wirtschaftlicher Eigentümer” (economic owner) is whoever can initiate transactions, which is regularly the holder of the private key. In German tax law, ownership follows the keys.

No. Holding or self-custodying your own Bitcoin requires no license from the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, the Federal Financial Supervisory Authority).

The relevant license comes from Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA). MiCA, Art. 3(1)(17), defines custody as “the safekeeping or controlling, on behalf of clients, of crypto-assets or of the means of access to such crypto-assets,” including private keys.

BaFin’s guidance notice, section II.1, confirms that custody of one’s own crypto-assets is not covered, because it is not carried out for clients. Nor is making or selling wallets that users operate themselves, as long as the provider has no intended access to the keys.

A license is required when a business provides crypto-asset services to clients on a commercial basis. MiCA, Art. 3(1)(16), lists those services, including custody, operating a trading platform, exchanging crypto-assets for funds and transfer services.

BaFin’s guidance notice, section V.1, reads “commercial basis” as an activity designed to last and run for profit. The same notice records that MiCA applies to crypto-asset services from 30 December 2024 under its Art. 149(2).

Germany implements MiCA through the Kryptomärkteaufsichtsgesetz (KMAG, Crypto Markets Supervision Act), enacted as Article 1 of the law of 27 December 2024, BGBl. 2024 I Nr. 438, and last amended by Article 21 of the law of 25 March 2026, BGBl. 2026 I Nr. 81. Under § 1(1) and (2) KMAG, the act serves to implement MiCA and applies to crypto-assets as defined in Art. 3(1)(5) MiCA.

Before MiCA, custody for clients was licensed nationally as “Kryptoverwahrgeschäft” (custody business) under § 1(1a) sentence 2 no. 6 of the Kreditwesengesetz (KWG, Banking Act). BaFin’s notice calls the MiCA custody service comparable to that former activity.

The transition period is over. MiCA, Art. 143(3), allowed existing providers to continue until 1 July 2026 at the latest, and let Member States shorten that period. Germany shortened it: deemed licenses under § 50(2) KMAG expired at the latest at the end of 31 December 2025.

They apply to the businesses you deal with, not to you as a private holder. § 2(1) no. 2 of the Geldwäschegesetz (GwG, Money Laundering Act) lists “Anbieter von Kryptowerte-Dienstleistungen” (providers of crypto-asset services) among its obliged entities, insofar as they act in the course of their trade or profession.

The travel rule makes your exchange collect information about you and your wallet; it does not touch direct transfers between people without a provider.

The rule is Regulation (EU) 2023/1113 of 31 May 2023, the Transfer of Funds Regulation (TFR). Under its Art. 2(4), it does not apply to a “person-to-person transfer of crypto-assets carried out without the involvement of a crypto-asset service provider.”

TFR Art. 3(20) defines a “self-hosted address” as a distributed ledger address not linked to a crypto-asset service provider or to a similar non-EU entity.

When an exchange sends Bitcoin to your self-hosted address, it must obtain and hold originator and beneficiary information. For an amount exceeding EUR 1 000, TFR Art. 14(5) says it “shall take adequate measures to assess whether that address is owned or controlled by the originator.” Article 16(2) sets the mirror rule for deposits from a self-hosted address.

The regulation does not prescribe a method. Recital 39 adds that a provider should in principle not have to verify information on the user of the self-hosted address.

Pending review: recital 58 of the TFR asked the European Commission to assess, by 1 July 2026, whether additional measures for self-hosted addresses are needed, “including the introduction of possible restrictions.” No such restriction is in force today.

Private Bitcoin gains are taxed as “private Veräußerungsgeschäfte” (private sale transactions) if you sell within one year of acquisition. The rule is § 22 no. 2 with § 23(1) sentence 1 no. 2 of the Einkommensteuergesetz (EStG, Income Tax Act). The EStG is federal law; the BMF’s guidance on it goes to the supreme tax authorities of the Länder (the German states).

The current guidance is the BMF letter of 6 March 2025, “Einzelfragen zur ertragsteuerrechtlichen Behandlung bestimmter Kryptowerte”, GZ IV C 1 - S 2256/00042/064/043, which replaces the letter of 10 May 2022. It instructs the administration; it is not a statute.

Under paragraphs 54 and 55 of the letter, exchanging Bitcoin for euros, goods, services or another token is a disposal, and the one-year period starts again after each exchange. Paying for a coffee in sats is a disposal.

Units are tracked individually. Where that is impossible, paragraphs 61 and 62 treat the units acquired first as sold first for the holding period, assessed wallet by wallet.

Yes, for Bitcoin held as private assets. Under § 23(1) sentence 1 no. 2 EStG, a sale is a taxable private sale only where “der Zeitraum zwischen Anschaffung und Veräußerung nicht mehr als ein Jahr beträgt” (the period between acquisition and sale is not more than one year).

Lending does not extend the one-year period. § 23(1) sentence 1 no. 2 sentence 4 EStG provides a ten-year period for certain assets used as a source of income, but paragraph 63 of the BMF letter states that this extension does not apply to currency tokens such as Bitcoin.

Under § 23(3) sentence 5 EStG, short-term gains stay tax-free “wenn der aus den privaten Veräußerungsgeschäften erzielte Gesamtgewinn im Kalenderjahr weniger als 1 000 Euro betragen hat.” This is a “Freigrenze” (exemption threshold), not an allowance. At €1,000 or more, the whole gain is taxable. Paragraph 53 of the BMF letter notes the figure was €600 up to the 2023 tax year.

Under paragraphs 33 and 34 of the BMF letter of 6 March 2025, mining counts as acquiring Bitcoin in exchange for a service; block reward and fees are both income.

Mining is a trade under § 15 EStG if the conditions of § 15(2) EStG are met, as paragraphs 35 to 39 explain. Otherwise the income falls under § 22 no. 3 EStG with the €256 threshold.

Under paragraph 47, mined coins are valued at market price, and hardware and electricity costs are deductible.

For income tax, the recipient steps into the giver’s shoes. On an “unentgeltlicher Erwerb” (acquisition without consideration), the acquisition by the predecessor is decisive under § 23(1) sentence 3 EStG, as paragraph 75 of the BMF letter of 6 March 2025 confirms.

Gift and inheritance tax falls under the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG, Inheritance and Gift Tax Act). For persons with unlimited tax liability, § 16(1) ErbStG sets these tax-free amounts:

You must prove every taxable transaction, and paragraph 87 of the BMF letter of 6 March 2025 states that a public key alone is not enough.

Using a foreign exchange triggers an extended duty to cooperate under § 90(2) of the Abgabenordnung (AO, Fiscal Code), including regular downloads of transaction histories. Paragraph 89 adds that data lost through an exchange insolvency or a hack counts against you.

For self-custody, paragraphs 101 and 104 let the tax office ask for wallet screenshots, wallet balances on 31 December, the addresses you used and transaction hashes.

Pending change: taxpayers whose surplus income exceeds €500,000 in a calendar year must keep records for six years under § 147a AO. Paragraph 105 notes that this threshold rises to €750,000 from 1 January 2027.

DAC8 is Council Directive (EU) 2023/2226 of 17 October 2023, which extends automatic tax information exchange to crypto-assets. Germany implemented it through the law of 22 December 2025, BGBl. 2025 I Nr. 352. Its Article 1 is the Kryptowerte-Steuertransparenz-Gesetz (KStTG, Crypto-Asset Tax Transparency Act).

The KStTG places its reporting duty on “Anbieter” (providers) in § 9(1). Under § 1(11), the services covered are the MiCA services “sowie Staking und Lending.”

The start dates, as the statute states them:

The BMF’s data record notice of 14 January 2026 confirms the first reporting period runs from 1 January 2026 to 31 December 2026, with transmission due by 31 July 2027.

In practice: expect your exchange to request a “Selbstauskunft” (tax self-certification), governed by § 6 KStTG. The reporting duty rests on providers, not on you.

German law allows you to hold your own keys without a license, and the licensing rules do not reach wallets you operate yourself. The restrictions appear where your wallet meets a regulated business.

The practical risks are your own. No authority can restore lost keys, and under paragraph 89 of the BMF letter the burden of proof stays with you.

This article is general information only, is not written in a professional capacity, and is not legal advice.

Yes. German and EU rules regulate businesses that provide services to Bitcoin users, not individuals who own Bitcoin. BaFin’s guidance notice of 3 January 2025 confirms that custody of one’s own crypto-assets is not a licensable service, because it is not carried out for clients. The BMF letter of 6 March 2025 notes that Bitcoin lacks currency status.

Yes, for private holdings. Under § 23(1) sentence 1 no. 2 EStG, a sale is taxable only if acquisition and sale are no more than one year apart. Paragraph 63 of the BMF letter of 6 March 2025 states that the ten-year extension for assets used as a source of income does not apply to currency tokens such as Bitcoin.

Under § 23(3) sentence 5 EStG, private sale gains stay tax-free if the total gain in the calendar year is less than €1,000. It is an exemption threshold, not an allowance, so a total of €1,000 or more is taxable in full. The BMF letter of 6 March 2025 notes the figure was €600 up to the 2023 tax year.

No. MiCA, Art. 3(1)(17), defines custody as safekeeping crypto-assets or private keys on behalf of clients. BaFin’s guidance notice of 3 January 2025 states that custody of one’s own crypto-assets is not covered. A license is needed only by businesses that provide crypto-asset services to clients on a commercial basis.

For transfers of more than €1,000 to or from a self-hosted address, Articles 14(5) and 16(2) of Regulation (EU) 2023/1113 require the exchange to take adequate measures to assess whether you own or control that address. The regulation does not prescribe a method and does not apply to direct transfers made without a provider.

Under § 21 KStTG, providers’ duties apply for the first time to calendar year 2026. Under § 9(1) KStTG, providers report to the Federal Central Tax Office by 31 July for the preceding reporting period. The BMF notice of 14 January 2026 sets the first transmission deadline for 2026 data at 31 July 2027.

For income tax, heirs take over the deceased’s acquisition date under § 23(1) sentence 3 EStG, as paragraph 75 of the BMF letter of 6 March 2025 explains. Inheritance tax applies separately: § 16(1) ErbStG grants tax-free amounts of €500,000 for spouses, €400,000 for children and €200,000 for grandchildren with unlimited tax liability.

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