{"id":8098,"date":"2025-08-14T10:18:48","date_gmt":"2025-08-14T08:18:48","guid":{"rendered":"https:\/\/winheller.com\/blog\/en\/?p=8098"},"modified":"2026-03-04T14:24:27","modified_gmt":"2026-03-04T12:24:27","slug":"german-tax-liability-crypto-investors","status":"publish","type":"post","link":"https:\/\/winheller.com\/blog\/en\/german-tax-liability-crypto-investors\/","title":{"rendered":"German Tax Liability for Crypto Investors Despite Moving Abroad"},"content":{"rendered":"\n<p>The Stuttgart tax office recently confirmed the application of <strong>extended limited tax liability<\/strong> under Section 2 of the German Foreign Tax Act (Au\u00dfensteuergesetz, AStG) to a crypto investor who had moved to a low-tax country in a case we handled. The case concerns <strong>income from trading in cryptocurrencies<\/strong> as well as from <strong><a href=\"https:\/\/www.winheller.com\/en\/banking-finance-and-insurance-law\/bitcoin-trading\/bitcoin-and-tax\/taxation-staking.html\" title=\"\">staking<\/a><\/strong> and <strong><a href=\"https:\/\/www.winheller.com\/en\/banking-finance-and-insurance-law\/bitcoin-trading\/bitcoin-and-tax\/taxation-lending.html\" title=\"\">lending<\/a><\/strong>, which, in our experience, are the most important use cases affecting almost all crypto investors.<\/p>\n\n\n\n<p>Because it is common for very <strong>wealthy crypto investors<\/strong> who earn millions in income from their crypto investments each year to <strong>move abroad<\/strong>, there is a lot at stake for these investors. If the tax authorities&#8217; opinion in this individual case becomes generally accepted, investors would still be liable for tax in Germany for <strong>up to ten years<\/strong> after moving away.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The key points of the letter<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Crypto trading (Section 23 EStG):<\/strong> Profits from short-term trading in cryptocurrencies are not considered foreign income, as crypto assets cannot be attributed to a specific country. They are therefore subject to extended limited tax liability.<\/li>\n\n\n\n<li><strong>Staking and lending (Section 22 No. 3 EStG):<\/strong> Whether this income is considered foreign depends on the location of the platforms. German translations of the terms and conditions of the platforms used (e.g., Coinbase, Blockchain.com, Bitstamp, Binance, Nexo, etc.) can be used to verify the location.<\/li>\n<\/ul>\n\n\n\n<p>However, the letter is only an initial response to a request for binding information and may not yet be a final statement.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Criticism of the German tax office&#8217;s opinion<\/h2>\n\n\n\n<p>We consider the tax office&#8217;s opinion to be unconvincing. In our opinion, the conditions for extended limited tax liability under Section 2 AStG are not met.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">No \u201clocation\u201d of crypto assets<\/h2>\n\n\n\n<p>Crypto assets are digital, intangible economic goods with <strong>no physical existence<\/strong>. In our opinion, the term \u201clocation\u201d in the law presupposes a physical location (as is the case, for example, with real estate, art, and precious metals), which is not possible with cryptocurrencies. Cryptocurrencies cannot therefore be \u2018located\u2019 or \u201cfound\u201d anywhere. It is more than doubtful whether the legislator intended to include digital assets such as cryptocurrencies in the regulation at all. We believe not.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><a href=\"https:\/\/www.winheller.com\/en\/news\/newsletters\/vsn-insider.html\" title=\"\"><a href=\"https:\/\/www.winheller.com\/en\/news\/newsletters\/vsn-insider.html\" title=\"\">Would you like to receive such news directly to your mailbox every two months? Subscribe to our newsletter Private Clients Update &#8211; Assets | Foundations | Succession.<\/a><\/a><\/h4>\n\n\n\n<p>In our opinion, it is therefore important to interpret the term \u201clocation\u201d functionally, similar to how the location of the obligor is used as a basis for rights and claims. In our opinion, the decisive factor for cryptocurrencies should therefore be the <strong>place of control<\/strong> and a <strong>\u201chuman\u201d point of reference<\/strong> should be sought \u2013 e.g., the taxpayer&#8217;s place of residence or tax residence.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Lack of domestic connection<\/h2>\n\n\n\n<p>Even if crypto income is not considered foreign, typical \u201ccrypto emigration cases\u201d <strong>lack a concrete domestic connection<\/strong>. This is because Section 2 of the AStG requires continuing <strong>significant economic interests in Germany<\/strong>. However, the typically very wealthy crypto investor leaves Germany completely, meaning they no longer have a residence here, no shareholdings under corporate law, no real estate, etc. Instead, they hold a large crypto portfolio on their cold wallets or foreign exchanges and, if applicable, securities, etc., also with foreign banks. They therefore have no connection whatsoever to their old home country of Germany.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Constitutional concerns<\/h2>\n\n\n\n<p>We consider it particularly problematic that, in practice, the tax authorities are completely <strong>unable to enforce the possible tax payment<\/strong>. The vast majority of investors will not worry about further taxation in Germany and will not report their income received after leaving Germany to the German tax authorities. The tax office regularly does not know where the taxpayer has moved to (foreign address) and has <strong>no realistic means of carrying out an assessment<\/strong>. Only those who are honest and particularly well-informed, who contact the German tax office on their own initiative, would therefore continue to pay taxes in Germany <strong>for another ten years<\/strong>.<\/p>\n\n\n\n<p>In technical jargon, these cases are referred to as a so-called <strong>structural enforcement deficit<\/strong>, as the actual enforcement of legal regulations systematically fails due to practical and legal hurdles that are already inherent in the law itself. Such a law, which in a sense only affects the honest (or the stupid?), violates the principle of equality (Art. 3 GG) and is therefore <strong>invalid<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Comparison of arguments<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td>Issue<\/td><td>Stuttgart Tax Office<\/td><td>WINHELLER<\/td><\/tr><tr><td>Location of crypto assets<\/td><td>Crypto assets cannot be clearly assigned to any foreign country and are therefore not considered foreign income. They are subject to extended limited tax liability.<\/td><td>Crypto assets are intangible, digital assets with no physical location. A functional interpretation is required: the decisive factor is the place of control, i.e., the taxpayer&#8217;s place of residence.<\/td><\/tr><tr><td>Domestic connection (Section 2 AStG)<\/td><td>Significant economic interests exist in Germany due to the crypto income.<\/td><td>No domestic connection exists \u2013 the client lives and conducts business exclusively abroad. A domestic connection may not be fictitious if it does not actually exist.<\/td><\/tr><tr><td>Systematics (Section 34d EStG)<\/td><td>No clear allocation of crypto income \u2192 therefore no foreign income \u2192 taxable in Germany<\/td><td>No allocation possible, digital assets are not documented anywhere \u2192 may not automatically lead to domestic income<\/td><\/tr><tr><td>Constitutional law<\/td><td>Not addressed<\/td><td>Extensive interpretation of Section 2 AStG inadmissible. There is a structural enforcement deficit that violates Art. 3 GG.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Recommendations for crypto investors after moving abroad from Germany<\/h2>\n\n\n\n<p>Crypto investors who earn income from crypto investments after moving abroad should carefully consider the tax consequences and closely follow further developments. Our crypto tax experts are happy to provide you with advice and assistance.<\/p>\n\n\n\n<p>Continue reading:<br><strong><a href=\"https:\/\/winheller.com\/blog\/en\/moving-to-switzerland-tax-pitfalls\/\" title=\"\">Moving to Switzerland from Germany \u2013 Watch out for Tax Pitfalls<\/a><\/strong><br><strong><a href=\"https:\/\/www.winheller.com\/en\/banking-finance-and-insurance-law\/bitcoin-trading\/bitcoin-and-tax.html\" title=\"\">German cryptocurrency taxation: Bitcoin, Ether &amp; Co.<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Stuttgart tax office recently confirmed the application of extended limited tax liability under Section 2 of the German Foreign Tax Act (Au\u00dfensteuergesetz, AStG) to a crypto investor who had moved to a low-tax country in a case we handled. The [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":8129,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1152,1730,1731],"tags":[],"class_list":["post-8098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital-currencies","category-international-tax-planning","category-cryptocurrency-taxation"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/comments?post=8098"}],"version-history":[{"count":7,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8098\/revisions"}],"predecessor-version":[{"id":8177,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8098\/revisions\/8177"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/media\/8129"}],"wp:attachment":[{"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/media?parent=8098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/categories?post=8098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/winheller.com\/blog\/en\/wp-json\/wp\/v2\/tags?post=8098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}