German Pledge Taxation: Capital Inflows, EUR 256 Threshold and Holding Period

At a glance: The core points

Two moments, two types of taxes: Pledge rewards are taxed when they are received, and then taxed again when they are sold. People who only focus on the sales process do not see the whole picture clearly.

Inflows are income: According to Section 22 (3) of the German Income Tax Act (EStG), this is considered income from other services, valued at the market price at the time of receipt, and paid at your personal tax rate.

256 euro threshold: This is a threshold, not a tax exemption. Once it exceeds 1 euro, the full amount will be taxed. This has nothing to do with the € 1000 threshold under Article 23.

Twelve months, not ten years: The tax authority has clarified the issue of extending the holding period. Each reward you receive starts a separate calculation cycle on the day it arrives.

The market value at the time of receipt is the cost of acquisition: Therefore, subsequent sales only tax changes in value since the inflow, rather than all proceeds.

Why is pledge double taxed?

The most common misunderstanding about pledge is not the amount of tax, but the number of taxes levied. Two separate incidents are involved and fall into different categories in terms of tax treatment.

The first event is the reward itself. You received a reward without selling any assets. From a tax perspective, this is a service for which you receive consideration: you provide capital to the network, and the network pays you for it. This income falls into the category of "other services" covered by Article 22, paragraph 3, of the German Income Tax Act.

The second event is the sale of coins after you receive them. Article 23 applies, and the rules are the same as for purchasing coins: sales within twelve months of holding are subject to tax, and sales after twelve months are tax-free.

There is a bridge between the two that disrupts many calculations: The market value at the moment of inflow is also the acquisition price at the second event.

If you receive an award worth € 100 and later sell it for € 130, you need to pay a tax on € 100 as other income and a tax on € 30 as capital gains. Instead of paying taxes twice on 130 euros.

Detailed explanation of inflows and the 256 euro threshold

The key is when you have the right to dispose of the reward. In an exchange, this refers to the moment the account is credited; in an owned node, it refers to the moment the address is accessed. Valuations use current prices rather than year-end prices or sale prices.

These gains have their own threshold, which is 256 euros per year. It is often confused with the € 1000 threshold under Article 23, but the scope and pool of the two are different. Both are thresholds rather than tax exemptions: if you have 255 euros in pledged income, you do not have to pay tax; if you have 257 euros, the full amount of 257 euros will be subject to tax.

This threshold applies to all "other services" within one year. If you make loans and pledges at the same time, you need to add the two and then compare them.

Tax type corresponding to the pledge event

Pledge event Tax type Legal basis Threshold and period Pledge (deposit) No taxable event--The twelve month period of the pledged coin continues to run -- Reward to account Other income Article 22 (3) of the German Income Tax Law The threshold of 256 euros per year, Based on market value at the time of receipt Holding awards No taxable event-a separate twelve month period from the date of receipt -- Selling awards within twelve months Private disposal Germany Article 23 of the Income Tax Act EUR 1000 threshold, Independent pool Reward sold after twelve months Tax exemption Article 23 of the German Income Tax Code No upper limit Withdrawal of pledged coins (unpledged) No taxable event-not a disposal -- Exchange of rewards into another cryptocurrency Simultaneous disposal and acquisition Article 23 of the German Income Tax Code The coins you receive start a counting cycle again

Twelve month period in pledge

Each award starts a separate calculation cycle on the day it is received. People who collect rewards every day accumulate 365 separate deadlines over the course of the year. It sounds unrealistic, and it is, but it is the legal position and why so few people track pledge taxes without the aid of tools.

Concerns that "pledge will extend the holding period of pledged coins to ten years" have been eliminated. This stems from an old-fashioned interpretation of Article 23, paragraph 1, item 2, sentence 4 of the German Income Tax Law. Tax authorities do not apply to cryptocurrencies. Twelve months are still the rule, which applies to both pledged coins and rewards.

What regulations apply to different types of pledge

Pledge is a general term that covers very different processes. For tax purposes, the main difference between them is one point: Do you receive rewards or do you receive different assets?

Form Tax consequences Based on Notes Use of independent pledge of own nodes Reward as other income Article 22 (3) of the German Income Tax Code At larger scales, business status may be reviewed Pledges made through exchanges Awards as other income Article 22 (3) of the German Income Tax Act are recorded as inflows; exchange reports are not binding Pledge pool Reward as other income Article 22 (3) of the German Income Tax Act Pool fees reduce inflow amount Liquidity pledge with tokens such as stETH controversial: Is it an exchange or just a receipt Article 23 or Article 22 (3) is usually regarded as an exchange, and tax revenue is generated upon entry Re-pledge (Retaking) Additional reward layers, same classification Article 22 (3) of the German Income Tax Code Two reward streams, each inflow requires two valuations of the pledged ETP in the securities account investment income or disposal, Depending on the structure Article 20 or Article 23d Allocation and cumulative products are treated differently Borrowing rather than pledging interest as other income Article 22 (3) of the German Income Tax Act The same threshold of € 256, Sharing a pool

Working example of real numbers

Suppose you pledged Ethereum in 2026 and received a total of 800 euros worth of rewards throughout the year, scattered throughout the year, with each transaction valued at the price on the day of receipt. Your personal tax rate is 30%.

Step 1, inflow.

€ 800 exceeds the € 256 threshold. The tax payable is the full amount of € 800, rather than € 544, which exceeds the threshold. At 30%, income tax is 240 euros.

Step 2, sell.

You sell these rewards eight months later for a total of € 1,100. The acquisition cost is 800 euros in the first step. Capital gains were 300 euros.

Step 3, second threshold.

This € 300 is below the € 1000 threshold under Article 23. If you have no other personal disposal in the same year, this portion remains tax-free.

Results:

For an inflow and gain of 1,100 euros, a tax of 240 euros will be payable. Waiting for twelve months will not change the 240 euros, because waiting will not exempt the incoming tax.

This is a practical lesson: Waiting helps solve the tax issue of the sale, but it cannot solve the tax issue of the inflow.

Anyone who makes a pledge faces a tax liability every year, even if no sale is made. And the fee is calculated in euros, while the reward is in the form of coins.

What needs to be recorded

Compared with simple buy-and-hold, the record-keeping obligation for pledges is more stringent because the tax department requires two values for each event instead of one. Without records, you cannot value rewards, and estimates will usually not work in your favor.

• Each inflow: Date, time, quantity, price at arrival and the resulting amount in euros. Prices need to have a clear source and this source should be consistent throughout the year.
• Each sale: Dates, quantities, earnings, and allocations showing which inflows were sold. For daily rewards, this is the end of manual work.
• About terms: Order. If you don't fix and record which coins are sold first, you cannot prove the twelve month period.
• Platform records: Account statements and transaction overview. They are not tax-binding, but provide evidence that the inflow occurred.

Upcoming changes in 2027

A ministerial draft proposes a 25% proportional withholding tax on proceeds from the sale of crypto assets purchased after December 31, 2026. The process is currently in progress and no law has been promulgated. The Income Tax Reform Act of 2027 passed by the Cabinet on September 2, 2026 does not contain anything about crypto assets.

For pledges, the decisive issue remains unresolved. In the drafts known so far, the inflow tax stipulated in Article 22, paragraph 3, remains unchanged. If a proportional tax on disposal comes, the pledgor will face two different tax rates in the same process: the inflow portion will be subject to personal tax rates and the value change portion will be subject to proportional tax rates.

FAQ about pledge and tax

If I don't sell pledge rewards, are they tax-free? [TAG
No. Taxes arise from inflows, not sales. Anyone who receives more than € 256 in a year and does not sell any part of it still has taxable income.

What is the tax rate for pledge?
Apply your personal income tax rate, i.e. between 14% and 45%, plus a solidarity surcharge and church tax, if applicable. A proportional withholding tax of 25% does not apply here.

Where do I enter pledged income in my tax return?
Services section in Annex SO (Anlage SO). The sale of rewards belongs to the same form, but in the private disposal section.

Is the threshold of 256 euros calculated separately for each coin?
No, it applies once a year to the sum of all other services. Pledge and loan on three different networks to give a combined amount.

Will a pledge extend the holding period to ten years?
No. Tax authorities do not apply to this interpretation of cryptocurrencies. Twelve months is still the rule.

What happens when pledged coins are sold at a loss?
Losses from private disposal can only offset gains from similar income, and cannot offset wages or investment income. Inflows that you have paid taxes are not affected.

Do I have to list each reward separately?
Each inflow must be valued separately. Total amounts are usually stated in tax returns, and detailed lists are included as evidence in appendices. For daily rewards, this is inevitable.

Source and Status

• Circular of the Federal Ministry of Finance on March 6, 2025 on Individual Issues Concerning Income Tax Treatment of Certain Cryptocurrencies
• The Federal Fiscal Court, Judgment of February 14, 2023, Case No. IXR3/22, Concerning the Asset Status of Cryptocurrencies
• Articles 22 (3) and 23 of the German Income Tax Law
• are based on details of the ministerial draft reported on September 8, 2026. There is currently no official full text.

(As of September 10, 2026. This article does not constitute investment advice. Price and fee structures are subject to change; please check terms with your provider before purchasing. This is no substitute for tax advice: Since the classification of liquidity pledges, repledges, and exchange-traded products has not yet been finalized, consulting with your adviser is something worth your time.)