How are staked assets taxed in Germany?
In this article, we explain how staking works, how you can report staking profits on your tax return and under what circumstances staking profits are (completely) tax-free in Germany.
First things first...
This article only applies to German customers and German tax law. Coinbase doesn’t provide tax advice. None of this should be considered as advice or an individualized recommendation, but it’s important to us that our readers have relevant information available to them in the most accessible way possible. Please consult a tax professional regarding your own tax circumstances.
What is staking and what are staking rewards?
Why stake?
Staking offers benefits to both individuals and PoS networks. For individuals, staking involves locking a certain amount of crypto in a protocol or platform and receiving rewards or ‘interest’ in return. This can be a great way to grow your crypto wealth while supporting the relevant network.
For the network itself, staking brings several benefits. The first is that when users stake their tokens, the amount in circulation is reduced. This reduced amount, along with stable or growing demand, can potentially increase the value of the token. Second, staking increases the network's processing power, enabling it to validate transactions more efficiently and process more transactions at once. Finally, crypto assets in staking become part of the validation process, reducing reliance on a central authority.
This decentralisation strengthens the security and resilience of the network, creating a win-win for both individuals and the larger ecosystem.
How does staking work?
Here is a simple example of how staking can work: you have 100 SOL in your wallet and decide to delegate your tokens to a validator who pays you an annual return of 5%. After a year, you decide to withdraw your original 100 SOL and receive an additional 5 SOL as a reward, so you end up with 105 SOL in your wallet.
Staking and taxes
Staking earnings are considered ‘other income’ in Germany in accordance with § 22 No. 3 of the German Income Tax Act (EStG) and are subject to personal income tax at a rate between 0% and 45%. An annual exemption limit of €256 applies to these rewards. If this amount is exceeded, the entire amount is taxable.
The taxable value of staking rewards is determined by the market value of the cryptocurrency at the time of receipt. A subsequent sale of these rewards may also result in taxable capital gains, unless the holding period is more than one year, in which case the sale is tax-free.
It is important to note that taxable events do not only concern the sale of cryptocurrencies for fiat currencies (e.g. euros). Transactions between cryptocurrencies are also considered taxable events that can lead to taxable gains or losses.
An annual allowance of €600 applies to profits from trading in cryptocurrencies. In the 2024 tax year, this amount was increased to €1,000. If the allowance is exceeded, the entire profit is taxable.
Previously, speculative gains were only tax-free if they were held for ten years. However, the updated BMF information letter now aligns staking rewards with other crypto transactions, so that sales after more than a year are tax-free.
How can the Crypto Tax Calculator help?
The Crypto Tax Calculator automatically categorizes your staking rewards and applies the correct tax treatment to those transactions. In certain cases where a transaction is not categorized (often due to insufficient data), you can easily manually assign it by selecting “Staking Rewards” from the drop-down menu in the “Category” column
There are three methods for connecting your Coinbase account to Crypto Tax Calculator. The simplest method is to use the one-click OAuth integration to upload your Coinbase transactions. Alternatively, you can use an API key or upload a CSV file to import your Coinbase data
For more information on how to connect your Coinbase account to the Crypto Tax Calculator, please refer to this link.
