How to Report Airdrop Income in Germany: Your Complete Tax Guide

Understanding Airdrop Taxation in Germany

Cryptocurrency airdrops – free distributions of tokens to wallet holders – are considered taxable income under German law. The Federal Central Tax Office (Bundeszentralamt für Steuern) treats airdrops as “other income” (sonstige Einkünfte) under §22 Nr. 3 of the Income Tax Act (EStG). This means you must declare their fair market value at the time of receipt, regardless of whether you sell them immediately or hold them. Failure to report can trigger penalties up to 10% of the evaded tax, plus interest.

Step-by-Step Guide to Reporting Airdrop Income

1. Record Transaction Details: Note the date, token amount, and exact time of receipt for each airdrop.
2. Determine Market Value: Calculate the EUR value using exchange rates at receipt time (e.g., via CoinGecko or CoinMarketCap historical data).
3. Classify Income Type: Report under “Anlage SO” (Supplement SO) for miscellaneous income in your tax return.
4. Calculate Taxable Amount: Sum all airdrop values received during the tax year. No minimum threshold applies unless total miscellaneous income is below €256.
5. Report Capital Gains Separately: If you later sell airdropped tokens, document profits/losses under “Anlage KAP” for capital assets.

German Tax Rates and Deadlines

Airdrop income is taxed at your personal income tax rate (14-45%), plus:

• 5.5% solidarity surcharge (Solidaritätszuschlag)
• 8-9% church tax (Kirchensteuer) if applicable

Key Deadlines:
• Paper returns: July 31st following the tax year
• Electronic returns: October 31st (extendable via tax advisor)
• Late submissions risk €25/month penalties up to €2,500

Common Reporting Mistakes to Avoid

• Assuming small airdrops are tax-exempt (no de minimis rule)
• Using incorrect valuation dates (must be receipt date, not sale date)
• Omitting airdrops received in non-custodial wallets
• Forgetting to report subsequent capital gains when selling tokens
• Mixing airdrop income with mining/staking income categories

Frequently Asked Questions (FAQ)

Are all crypto airdrops taxable in Germany?

Yes. The BMF (Federal Ministry of Finance) considers airdrops taxable income unless proven to be a non-reciprocal gift – which is exceptionally rare.

How do I value tokens with no immediate market price?

Use the first verifiable exchange listing price. If unavailable, document your valuation method and retain evidence for potential audits.

What if I received airdrops years ago but didn’t report them?

File amended returns (Steuererklärungen) for up to four previous years. Voluntary disclosure may reduce penalties if done before authorities contact you.

Can I deduct transaction fees?

Yes. Gas fees or exchange costs directly tied to claiming/transferring airdrops are deductible as Werbungskosten (income-related expenses).

Do DeFi airdrops follow the same rules?

Generally yes. However, liquidity provider rewards may be classified as business income if trading is frequent/professional – consult a Steuerberater.

How are hard forks treated?

Similar to airdrops: New coins (e.g., Bitcoin Cash from Bitcoin) are taxed at market value when you gain control of them.

Final Recommendations

Always maintain detailed records including wallet addresses, transaction IDs, and exchange rate screenshots. For complex cases – especially involving large sums or professional crypto activities – seek advice from a German-certified tax advisor (Steuerberater). Proper reporting ensures compliance while avoiding costly disputes with tax offices (Finanzämter).