Selling memin: tax rules applicable in Germany from 2026

Mone-for-profit sale: Tax rules applicable to small currencies

Mone-for-money such as doggy coins, Shiba Inu coins, Pepe coins or Bunker coins may experience significant price fluctuations in a short period of time. Investors who enter early and sell after prices rise sharply are expected to make high profits. However, the tax rules that apply to more well-known cryptocurrencies often apply equally to memin.

It doesn't matter whether a coin has a high market cap, is only popular for the short term, or whether it was originally born just as an Internet joke. The most critical factors are: date of purchase, date of sale, and total profit realized.

Memin is taxed as cryptocurrency

The Federal Treasury considers cryptocurrencies in private assets as so-called "other economic goods." This includes not only Bitcoin and Ethereum, but also smaller altcoins and memes.

If an individual sells memin within one year of purchase and makes a profit, this may be considered a "private sale transaction" under Section 23 of the Income Tax Act. Generally, the name or technical design of the currency is not important, but whether it was purchased and subsequently sold.

Therefore, the basic tax rules also apply to currencies with low market capitalizations or traded on decentralized trading platforms.

One-year holding period is crucial

For privately held cryptocurrencies, there is usually a one-year holding period. If the interval between purchase and sale exceeds twelve months, profits earned are usually exempt from tax under current law. However, if the sale occurs within one year, it is necessary to determine whether the profit is taxable.

Example:

An investor purchased memin for 2000 euros on January 10. On June 1 of the same year, he sold the coins for 7000 euros. Before deducting possible expenses, the profit is 5000 euros. Since less than one year has elapsed between the purchase and sale, the transaction is usually classified as a "private sale transaction". If the sale occurs after a one-year holding period, the profit is usually tax-exempt in private assets.

It's not just a sale of euros that counts.

Many investors believe that only withdrawing funds into a bank account involves taxes. But this is a common misunderstanding. Disposal does not just mean selling memin into euros. Converting it for another cryptocurrency may also be considered a sale for tax purposes.

Tax-related transactions may include:

Selling memin to euros

Converting memin to Bitcoin

Converting memin to ether

Converting memin to stablecoins such as USDT or USDC

Using memin to purchase goods or services

For example, if someone converts dogcoin into USDT and makes a profit, the profit is realized at the time of redemption. Even if stablecoins subsequently remain on cryptocurrency exchanges, it will not affect potential tax obligations. The Federal Ministry of Finance has made it clear that exchanging one cryptocurrency for another is usually regarded as a disposal of the transfer of cryptocurrency and an acquisition of the receipt of cryptocurrency.

The tax exemption is 1000 euros

There is a tax exemption of 1000 euros per year for profits from private disposal. This is not a tax deduction. If the total profit from all private disposals during the calendar year is less than € 1000, profits remain tax-free. Once this amount is reached or exceeded, all taxable profits can be assessed and taxed.

The calculation does not only consider the sale of individual memos. The total profit from all private disposals during the relevant calendar year is the key. In addition to various cryptocurrencies, other private dispositions may also be included in the calculation under certain conditions. Therefore, investors should not view each currency in isolation. The statutory tax exemption of 1000 euros is derived from Article 23 of the Income Tax Act.

Example of tax exemption:

An investor achieved the following results within one year:

Dogecoin made a profit of 700 euros

Pepe Coin made a profit of 450 euros

Shiba Inu Coin lost 200 euros

The total profit is 950 euros. Without other relevant private disposals, the total profit will be less than the 1000 euro tax exemption. However, if the total profit is 1050 euros, not only the part exceeding 1000 euros will be taxed. In principle, all profits of € 1050 may be subject to tax.

How to calculate profits?

Taxable profit is simply derived from the difference between sales revenue and purchase cost. Fees directly related to transactions may also affect calculations.

Simplified formula:

Selling price

minus purchase costs

minus deductible transaction costs

equals taxable profit or loss

If an investor buys memin for 1500 euros and later sells it for 4000 euros, the preliminary profit is 2500 euros. Trading expenses can change the taxable results accordingly. The calculations become more complex when investors buy in batches at different prices and then sell only partially.

Multiple purchases complicate allocation

Memin is usually purchased multiple times. For example, investors may initially invest a small amount of money, add to their positions after prices fall, and then sell only part of their positions.

At this time, it must be clear which currencies are considered sold, as well as the corresponding purchase costs and holding periods for these currencies. Guidelines for identifying and recording such transactions are included in the Federal Ministry of Finance's letter on cryptocurrencies. Depending on the circumstances, individual assessments or simplified allocation methods may apply. It is particularly important that the calculation method chosen must be retroactively and consistently documented.

Investors who hold the same memin on multiple exchanges and wallets should not mix positions without verification. Transfers between individual wallets are usually not considered a sale, but must be recorded to avoid being mistakenly classified as taxable transactions.

Loss on sales of miniin may be related

Not all memes will appreciate in value. Many projects have seen their market value shrink significantly shortly after launch or are almost no longer traded. If you sell or exchange memin at a low price during the one-year holding period, you may incur a deductible loss from private sales.

Such losses are usually deductible against profits from other private sales. However, deductions cannot be freely made against wages, operating income or capital gains. If losses are still remaining, within this income type, the losses prescribed by law may be carried forward or backward. But falling prices alone are not enough. As long as the coin remains in the wallet and has not been sold, the loss is usually not realized for tax purposes.

The special case of worthless currencies

Memocoins that have become almost worthless or can no longer be traded are particularly challenging. This occurs, for example, after a "carpet pulling" scam, a project ceases to operate, or a token is removed from a trading platform.

Total financial loss does not automatically result in tax authorities accepting a deductible tax loss. The key is usually whether there is a truly verifiable sale or other tax-related realization event. Therefore, sales at very low prices, token swaps, discontinued projects, and technically inaccessible currencies should be reviewed one by one. For large amounts, it is recommended to consult a tax consultant.

Airdrop and gift memein coins subject to special review

Memo coins do not always enter wallets through traditional purchases. Some investors receive currency through airdrops, promotions, community rewards or free token distribution. In such cases, tax treatment cannot be evaluated based solely on normal purchase rules. It must be reviewed, for example, whether taxable income was generated at the time of receipt, and what value can subsequently be set as purchase cost.

The beginning of the holding period may also depend on circumstances. Therefore, investors should record when and why they received these coins, as well as their market value at the time.

Different tax rules may apply to commercial transactions

The above rules mainly apply to sporadic sales in private assets. If there is extensive, systematic and for-profit activity, it may constitute a commercial activity. Simply having a large number of transactions does not automatically lead to being regarded as operating business. The decisive factor is the overall situation of the event.

Classification as a commercial activity may have significant consequences. These include: different profit determination rules, possible trade taxes, and loss of eligibility for tax-free sales after a one-year holding period. Investors who operate automated trading systems, manage third-party funds, continue to act as professional traders, or additionally provide a wide range of services related to transactions should review their classification as soon as possible.

What documents should investors keep

For memin, a complete record is particularly important. Small currencies are usually traded through multiple exchanges, decentralized platforms, or directly through wallets. Some projects or trading platforms disappear shortly after launch.

Therefore, investors should keep the following information as soon as possible:

Date and time of each purchase

Number of currencies purchased

Purchase price in euros

Cryptocurrency used when redeemed

Date and value of each sale or redemption

Transaction and network fees

Exchange statements and CSV files

Wallet addresses and transaction hashes

Proof of transfers between personal wallets

Information on airdrops or gifts of coins

Exchange rates and price sources used

Screenshots alone are usually not enough, but can be supplemented. Complete transaction history, blockchain data and traceable calculations are better. The Federal Ministry of Finance clearly emphasized the obligation to cooperate and the obligation to record cryptocurrency revenue in its 2025 letter.

Small currencies do not mean small tax amounts

The term "memin" can be misleading because it can lead to huge taxable amounts. Early buyers could make large profits well in excess of the tax exemption during periods of strong price increases. In principle, tax authorities do not distinguish whether a project is serious, technologically innovative, or only temporarily popular. Profits from speculative currencies may also be subject to tax. Therefore, investors should check when the currency is purchased before selling and the possible tax consequences of the sale or conversion.

Conclusion

For memin, the same tax rules generally apply to private assets as other cryptocurrencies. If the sale or redemption occurs within one year of purchase, profits may be subject to tax. After a one-year holding period, profits are usually exempt from tax under current law.

In addition, conversion to Bitcoin, Ethereum or stablecoin can already be regarded as a sale. At the same time, investors must comply with the 1000 euro annual tax exemption for all private sales.

Especially for small currencies traded in short periods, comprehensive records are crucial. Exchanges may close, tokens may disappear, and historical price data is sometimes difficult to obtain. Investors who keep records of purchases, sales, fees and wallet transfers early can make subsequent tax returns easier and more traceable.