Bitcoin & Co. : Draft BMF letter on the income tax treatment of cryptocurrencies and tokens – Part 2

Entwurf BMF Schreiben Besteuerung Kryptowährung & Token | PayTechLaw | Aboltin

In Part 2 of this article on the draft BMF letter on the income tax treatment of cryptocurrencies and tokens, we look at participation and recording obligations, units received through foks, initial coin offerings, staking, lending and airdrops.


Obligations to cooperate and keep records

So far, the draft only contains a placeholder for the obligations to cooperate and keep records. It should be noted that according to the general principles of the tax code, the taxpayer has an increased duty to cooperate in foreign matters (section 90 (2) AO).

The announcement of explanations in this regard suggests that the tax authorities have recognised that their currently almost only source of information is the honest taxpayers, especially since numerous trading platforms are based outside the EU.

If the BMF draft is published, this will also have consequences with regard to the preparation of tax returns. If the taxpayer wishes to deviate from the principles of the BMF letter in his tax return, he must disclose this to the tax office. Otherwise, just as with an incomplete tax return, he will face criminal consequences. Steffen Rapp has pointed out such consequences together with Florian Kraus in another context (see article)

However, according to reports, the Federal Ministry of Finance is already in talks with the OECD on an automatic exchange of information and the EU Commission is expected to submit a proposal for a directive in autumn.


Units obtained through Foks

The cryptocurrencies obtained through a Fok are new, separate assets. The acquisition costs of the already existing cryptocurrencies are to be allocated in proportion to the market prices of the units of the respective cryptocurrencies at the time of the fok. If no market price can be attributed to the newly created cryptocurrency, the acquisition costs remain with the previous cryptocurrency. To determine the speculation period, the acquisition date of the previous cryptocurrencies is transferred to the newly created units.


Initial Coin Offering

In the section on Initial Coin Offering, the BMF explains the different tokens and clarifies that their taxation, as already emphasised in the first part of our article, depends on the underlying legal agreements.

In the case of the issuance of the token as part of a business asset, the BMF points out that it must be checked whether the issuer of the token has also entered into contractual obligations that lead to a profit-reducing liability or provision for accounting and possibly for income tax purposes.

Furthermore, the BMF states that a token can also convey rights of a debt security. The resulting income or capital gains are subject to the final withholding tax as income from capital assets (§ 20 para. 1 no. 7 or para. 2 no. 7 EStG). In the case of income not generated in euros, this must be converted into euros. For the differentiation of capital claims, the draft refers to the BFH’s case law on Xetra gold bearer bonds.

Furthermore, the BMF explains that tokens given to employees can lead to taxable wages. In this context, the tokens are to be differentiated according to whether they are cash wages or benefits in kind. The new regulation of non-cash remuneration in Section 8 (1) EStG has not made the distinction any easier. This is also illustrated in the articles by Steffen Rapp on the topic of non-cash remuneration for vouchers.

The explanations of the draft can be understood to the effect that the valuation of the remuneration in kind (already) takes place with the granting of the entitlement of the token, even if the inflow (time of taxation) only takes place at a later point in time.


Staking, Lending and Airdrop

In the first part of our article, it was already pointed out that staking (proof of stake, masternode or cold staking), lending and airdrop in private assets for tax purposes can extend the one-year speculation period to ten years (§ 23 para. 1 no. 2 p. 4 EStG) if additional units or income are granted. The granted income is business income in the case of a commercial enterprise or other income in the case of private assets (§ 22 no. 3 EStG), which is subject to income tax. The acquisition costs are determined according to the market price at the time of acquisition. The market price can be the average value from the exchange rate of three different trading platforms (e.g. Kraken, Coinbase and Bitpanda) or web-based lists (e.g., If a stock exchange price is available, this is to be used as the acquisition cost.

According to the draft, the same applies to cryptocurrencies that a taxpayer receives for loading his own images/photos or private films (videos) on a platform.



Ultimately, we will have to wait and see which amendments or additions will be included in the draft after the associations’ comments and a hearing. We will report on further developments.


To the first part of this article:

Bitcoin & Co.: Draft BMF letter on the in-come tax treatment of cryptocurrencies and tokens – Part (1)


Cover picture: Copyright © Adobe/Aboltin

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