First German court ruling on taxable sales of cryptocurrencies

Here is the first ruling of a German fiscal court on the taxation of “cryptocurrencies” or – as the German fiscal authorities call them – “virtual currencies”. It is the decision of the Baden-Württemberg Fiscal Court of June 11, 2021 (Case No. 5 K 1996/19), which was recently published. In summary, the case in dispute concerned a taxation of gains realized in 2017 from the sale of cryptocurrencies held as private assets within the relevant period of one year.

Of course, such a ruling gives many taxpayers and their advisors cause to pay attention. However, anyone who has now placed their hopes in a surprising ruling that could be used to challenge the statements made by Germany’s tax authorities in the BMF letter dated June 17, 2021, will be largely disappointed. However, it is quite decisive for legal certainty on this topic that an appeal against this ruling has been filed with the Federal Fiscal Court (Case No. IX R 27/21). However, it is likely that numerous further tax court rulings will be published on this topic before the ninth chamber of the Federal Fiscal Court decides on this case.

In the following, we have summarized the main reasons for the ruling of June 17, 2021. You will find our opinion on these points in a separate post.


  • Gains from the sale of cryptocurrencies held as private assets within the relevant period of time are to be recognized as other income or income from private sales transactions pursuant to Sec. 22 No. 2 in conjunction with Sec. 23 para. sentence 1 no. 2 German Income Tax Act and to be taxed.


  • Cryptocurrencies are considered to be “other assets” within the meaning of Sec. 23 para. 1 sentence 1 no. 2 of the German Income Tax Act, which, in addition to things and rights within the meaning of the German Civil Code, also includes actual statuses and concrete opportunities, i.e. all economic advantages for which the taxpayer is willing to pay something to obtain and which are independently valuable.


  • The cryptocurrencies in the case at hand are to be regarded at least as an economic asset.


  • The cryptocurrencies in the case at hand are to be regarded at least as an economic asset.


  • Trading on special (online) exchanges and the prices realised clearly show that cryptocurrencies are amenable to a separate valuation and that market participants are willing to pay something for the acquisition of the virtual currency, which is why there can be no serious doubt about the transferability of cryptocurrencies either.


  • The taxation of profits from the sale of cryptocurrencies also does not violate Article 3 para. 1 of the German Constitution due to a structural enforcement deficit.


  • In particular, the fact that most trading platforms for cryptocurrencies are located abroad, as well as the fact that the sale of cryptocurrencies on online exchanges may be anonymous, does not affect this conclusion.


  • Rather, it is significant in this respect that – irrespective of the conditions of the sale – it is generally possible under certain circumstances for tax authorities, e.g. in the context of collective requests for information, to obtain the information required to establish facts relevant for taxation from online trading platforms as well.


  • The mere fact that private sales transactions with cryptocurrencies are difficult to detect by the tax authorities is not sufficient in itself to establish a structural enforcement deficit.


  • The competent tax office is not obliged to verify in detail the determination of the capital gains made by the tax payer and, if necessary, to initiate its own investigations, since it does not need to treat clear tax returns with suspicion, but can regularly assume their correctness and completeness.