Cryptocurrencies have long been more than just a niche investment. They are increasingly establishing themselves as an integral part of the asset planning of wealthy private investors – also with regard to gifts and inheritances. But how can Bitcoin, Ethereum and co. be optimally transferred to friends and family and the next generation from a German tax perspective? Below, we highlight the most important aspects and provide practical tips on how you can take advantage of tax benefits in Germany.
Price declines as a strategic opportunity for gifting
The volatility of cryptocurrencies may be a challenge for many investors, but it also offers opportunities. The tax value of a gift or inheritance is determined by the market value of the cryptocurrency at the time of transfer. A price drop can therefore be an ideal opportunity to give away large amounts of cryptocurrencies within the applicable tax allowances (see table below). So if you keep an eye on market movements, you can make considerable gains through clever timing.
Make conscious use of the ten-year period for crypto assets
Long-term planning pays off. Did you know that the tax-free allowances for gifts in Germany can be used again every ten years? So if you start making transfers early, you can pass on considerable sums tax-free over the years. This strategy can be particularly advantageous for cryptocurrencies with high growth potential.
No restart of the holding period in the event of a gift or inheritance
The one-year holding period, which determines whether the sale of a cryptocurrency is taxable or not within the meaning of the German Income Tax Act, does not restart in the event of a gift or inheritance. Instead, the donee or heir takes over the respective acquisition data of the transferor. If the coins have already been held by the donor or testator for more than a year, the new owner can sell them immediately tax-free.
Documentation of transactions: The key to tax security
An often underestimated aspect of transferring cryptocurrencies is documentation. Unlike traditional bank deposits or securities, there is no central office for crypto that automatically documents transactions. This means that the responsibility lies with the investors themselves.
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Complete documentation is therefore essential for the tax assessment of gifts and inheritances. Keep a record of when and at what price you acquired the cryptocurrencies and keep evidence of all transactions. It is best to use specially developed software tools or regularly export reports from the crypto exchanges you use. Insufficient documentation can lead to the tax authorities estimating the value – which often leads to unfavorable results.
Giving crypto as a gift: separate wallets for recipients
If you are planning to give away or bequeath crypto assets, it is advisable to set up a separate wallet for each recipient. Transfer the corresponding amounts to these wallets. Separate wallets help to avoid disputes about the division of digital assets and – at least in the case of gifts – about the timing of the transfer (and therefore the valuation) and make it easier to prove the personal allocation of the assets to the tax authorities.
Observe the obligation to notify the tax office
Gifts and inheritances – including cryptocurrencies – must be reported to the relevant tax office within three months. This applies regardless of whether the value is above or below the tax-free amounts. Tip: Many tax offices provide online forms specifically designed for this purpose.
Gifting and inheriting crypto assets with the right planning
Giving and inheriting cryptocurrencies in Germany offers numerous opportunities for tax optimization – provided you proceed with caution. Make clever use of price declines, keep careful records, use separate wallets and keep an eye on the ten-year period: Even these simple approaches can help you to efficiently pass on your digital assets to your loved ones. But be careful: the tax treatment of cryptocurrencies is complex and subject to constant change. Individual advice is therefore highly recommended in order to avoid legal pitfalls.
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Degree of relationship | Tax allowance (every 10 years) |
Spouse and registered partner | EUR 500,000 |
Children and stepchildren | EUR 400,000 |
Grandchildren (if children of the donor/testator are no longer alive) | EUR 400,000 |
Grandchildren (if children of the donor/testator are still alive) | EUR 200,000 |
Great-grandchildren | EUR 100,000 |
Parents and grandparents (only in the case of inheritance) | EUR 100,000 |
Parents and grandparents (only in the case of a gift) | EUR 20,000 |
All other persons (also: siblings, nieces, nephews, step-parents, children-in-law, divorced spouses) | EUR 20,000 |
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