Two paths out of exchange bankruptcy: return cryptocurrency, or pay euro dividends

Tax treatment after bankruptcy and liquidation of crypto asset exchanges: The difference between coin refunds and euro claims

If a cryptocurrency exchange becomes insolvent and you subsequently recover some of its assets, the key to determining its tax nature is not the amount paid, but the form of payment. If the original cryptocurrency is returned to your control, nothing is tax deemed to have occurred: the acquisition date and acquisition cost remain the same, and the long-expired holding period remains valid. On the contrary, if you obtain legal tender (such as euros or U.S. dollars) by filing bankruptcy claims, it constitutes a completely different tax event, and the tax authority has not yet made clear specific regulations on this. This distinction is at the heart of this article and currently affects many German investors as several large bankruptcy proceedings are in liquidation and Mt. Gox's deadline is set for October 31, 2026.

Two exit paths: segregated return of coins or liquidation of euro claims

When bankruptcy proceedings are initiated, assets are divided into two parts. Assets belonging to the debtor constitute the bankruptcy estate and are distributed among creditors. Assets belonging to third parties, even if they are in the custody of the debtor, are not bankruptcy assets. In response to this situation, the German Bankruptcy Law stipulates a "right of recovery": according to Article 47 of the Bankruptcy Law, a person who has rights in an object that is not the bankruptcy property can request the return of the object. At this point, the person is no longer a bankrupt creditor, but takes back his property as the owner.

Whether you can go down this path depends on hosting arrangements. If your coins are deposited in an escrow account that is separate from the exchange-owned assets and belongs to you, there is a high possibility of claiming the right of withdrawal. If they are mixed with other customers 'funds in pooled wallets on exchanges, the result is usually ordinary bankruptcy claims formed under Article 38 of the Bankruptcy Code: a monetary claim based on the valuation on the date of the bankruptcy proceedings, and ultimately only receives a certain liquidation rate dividend. We detail the legal aspects of this distinction in another article, and the zonda/crypto case shows how this can be done in practice.

Why classification precedes tax issues

Tax processing follows classification under civil law, not the other way around. If you are not sure whether you will recover coins or monetary claims, you cannot determine the tax consequences. If in doubt, the answer lies in the bankruptcy administrator's letter and claim form: if claims denominated in euros or dollars are listed there, you are an insolvency creditor.

The return of original coins does not constitute a disposal within the meaning of Article 23 of the Income Tax Act

According to established jurisprudence, crypto assets are considered "other assets" within the meaning of Article 23(1), paragraph 1, item 2, of the German Income Tax Act (EStG). This was established in the Federal Ministry of Finance's judgment of February 14, 2023, and the Ministry of Finance's notice of March 6, 2025 continued this classification. As a result, proceeds from the sale of privately held assets are taxed only if the period between acquisition and disposal does not exceed one year.

These two terms are crucial. Acquisition refers to the acquisition of assets from a third party for payment. Disposal , as its mirror image, refers to the transfer of assets acquired for payment to a third party. Both presuppose changes in consideration and legal ownership. When the bankruptcy administrator returns your own coins to you, they are fulfilling their claim for withdrawal. You don't have to pay any consideration for this, ownership does not transfer, it just becomes accessible again. According to this definition, there is no private disposal and the return itself does not trigger tax.

There is a limitation here: the Ministry of Finance notices that bankruptcy situations are not dealt with separately here. The classification stems from the general definition set out therein, rather than from the tax authority's statement of the bankruptcy process.

In the case of refunds, the holding period from the year of acquisition continues to be calculated

The one-year period stipulated in Article 23 of the Income Tax Act begins to be calculated again after each asset exchange. Returns are not exchanges and therefore will not start over. This is usually good news for you: Whoever bought in 2021, lost access in 2022, and took back the same coin in 2026, holds an asset holding period that expired many years ago. Subsequent sales of these assets are tax-free for privately held assets, regardless of the price increase during the period.

Conversely, if the acquisition occurred shortly before the crash and was returned quickly, the same mechanism may work against you. Deadlines may still be running at that time. For total income over a calendar year, the exemption threshold set out in Article 23(3)(5) of the Income Tax Act is that tax exemption remains if the sum of all private disposals is less than 1,000 euros. As of the 2023 tax period, the threshold is 600 euros. This threshold applies to the sum of all private disposals for a year, not for each coin.

Mt. Gox: The extended repayment deadline will end on October 31, 2026

The most specific date for affected Germans comes from Japan. According to the notice issued by the Rehabilitation Trustee on October 27, 2025, Mt. The trustee of the Gox program has postponed the deadline for basic repayment, early one-time payment and interim repayment from October 31, 2025 to October 31, 2026 (Japan time). Japan is eight hours faster than Germany, so the time when it may take effect for you is still the day before.

The reason given by the trustee is that many creditors have not yet completed the necessary procedural steps, including identification verification and submission of payment details. This is the third extension of its kind. Anyone still waiting can find out more about Mt. Details of Gox's repayment deadline. In tax terms, this date is important because it determines the assessment period for which the inflow falls.

Monetary dividends face gaps in Ministry of Finance announcement

The second path is more difficult. In large proceedings, customer claims are not satisfied in coins, but are valued on the day the bankruptcy proceedings begin and paid out later as a dividend in money. In the FTX case, which initiated Chapter 11 proceedings in November 2022, this was the basic structure of liquidation. In economic essence, you receive consideration for coins that have never been sold.

According to the literal meaning of Section 23 of the Income Tax Act, this can be interpreted in two ways. One interpretation is that there is a lack of paid transfers to third parties: coins are lost in property, and dividends are payments of claims, so they are not disposed of or taxed. Another interpretation holds that the disposal event has occurred when the coin was converted into monetary claims. The key then is whether there has been more than a year between the acquisition and the opening of bankruptcy proceedings, which is almost always true for positions held before 2022.

Both interpretations lead to the same result for old positions, i.e., no tax. They only diverged when the acquisition occurred shortly before the collapse. The Ministry of Finance notice did not mention dividend payments in bankruptcy proceedings. If your case depends on this issue, you will need to apply to the Tax Office for a binding ruling (in accordance with Article 89(2) of the German General Taxation Code) or consult a tax consultant, and the facts should be publicly reflected in the tax return rather than quietly on one line.

US dollar payments: Foreign currency balances are separate assets

There is a trap here that has nothing to do with the coin itself. Large programs are paid in U.S. dollars. Separately, the foreign currency balance also belongs to "other assets" in Item 2 of Article 23(1), Paragraph 1, of the Income Tax Law. As dollars flow in, you acquire the asset and start calculating a separate holding period for it.

If you convert U.S. dollars into euros during that year and the U.S. dollar appreciates against euros during this period, taxable gains may be generated. This holds true even if the underlying coin is already indisputable for tax purposes. The exemption threshold of € 1,000 also applies here because it is the same type of income. Anyone who holds U.S. dollars for more than a year can be exempted from this issue.

Which units are considered to have been returned need to be determined based on individual ownership and first-in, first-out principles.

If only part of the positions are returned, the issue of which units will be counted will arise. The Ministry of Finance announced the name of the Individual Attribution Principle for this purpose. If individual attribution cannot be carried out, the first encryption asset acquired under a certain transaction mark will be deemed to be disposed of, and the valuation should adopt the average method. For simplicity, it can be assumed that the unit acquired first is processed first, i.e., first-in, first-out (FIFO).

There is also a wallet-based perspective: within a wallet, the selected method must be retained until all units under the transaction flag are disposed of. In this logic, the account of the bankruptcy exchange is a separate unit. Anyone who has purchased in batches over the years must rebuild the order before counting anything.

Article 89: Missing records are borne by taxpayers

The most difficult sentence for those affected is not in bankruptcy law, but in tax law. The Ministry of Finance's notice stated in paragraph 89:"Missing records and data loss (such as due to bankruptcy or hacking of trading platforms) are borne by taxpayers." The bankruptcy of the exchange was thus clearly mentioned and cannot be used as an excuse.

In practice, this means: The tax bureau does not have to believe that you made a purchase in 2017 just because the platform disappeared. The burden of proof to prove the acquisition and date is on you. What is often persuasive is the bank statement of the original transfer, the transaction overview on file, old confirmation emails from the exchange, the blockchain transfer transferred to your own address, and the documents of the bankruptcy process itself, namely the claim declaration documents and claim sheet excerpts. We have detailed how to build such a chain of evidence in the case of stolen coins.

For foreign trading platforms, extended cooperation obligations apply

Mt. Gox is cleared in Japan and FTX is cleared in the United States and Bahamas. Almost every known procedure involves foreign operators, and the Ministry of Finance announced a tightening measure for this purpose. If crypto assets are acquired or disposed of through a centralized trading platform of a foreign operator, this establishes an extended cooperation obligation under Article 90(2) of the German General Taxation Code. Not only must you disclose the facts, you must also clarify the facts and provide necessary evidence. It is clearly mentioned that as long as the platform still exists, transaction overviews must be retrieved regularly and completely.

对于私人提供商的税务报告，通告划清了界限：如果报告看起来合理、内部连贯且不与其他调查结果矛盾，它可以携带审计轨迹。显然缺失的获取成本或缺失的交易平台会削弱合理性。相比之下，调整和更正只要标记清楚并合理解释（例如因为破产后获取数据缺失），就不会造成损害。任何需要整合多个来源的人可以在我们的加密软件比较中找到提供确切整合和所需设置提取的程序。

全额无股息损失：《所得税法》第 23 条不允许减记为零

如果程序在没有股息或接近零股息的情况下结束，亏损的问题便浮现出来。答案令人不安。《所得税法》第 23 条下的亏损 presuppose 一个处置事件，就像收益一样。如果持仓在没有替代物的情况下消失且没有任何转移，则该事件缺失，对于私人持有的资产而言，不会产生您可以依据《所得税法》第 23 条扣除的亏损。

Even if losses are admitted, they are subject to strict restrictions. According to Section 23(3)(7) of the Income Tax Act, losses can only be offset to the extent of gains realized from private disposals during the same year. Offsetting against employment income, interest or stock gains is prohibited. Section 23(3)(8) of the Income Tax Act allows at least a forward carry forward to the immediately preceding year and a forward carry forward to subsequent years, but there it is limited to similar income. The remaining paths in the case have been summarized in the crypto total loss and tax.

Self-custody excludes bankruptcy risk from calculation

All of the above occurs only because a third party holds the key. Coins in your own wallet will never enter the control of the exchange and therefore never enter the bankruptcy estate. Issues of withdrawal rights, dividends and opening dates do not arise at all, and records of the acquisition are kept in your own files rather than disappearing into a company's books.

You will pay a price for this, namely in terms of key risk. Anyone who loses a recovery mnemonic has no administrator who can declare his claim. You can refer to our software wallet comparison for which programs are suitable for you to host and what their limitations are. For large positions, separating trading balances from long-term positions remains the easiest rule: only the funds you actually intend to move are placed in accounts belonging to third parties.

Exchange Bankruptcy: Your next three steps

1. Clarify the return form and collect evidence. Read the manager's letter to confirm whether the coins will be returned to you or list the monetary claims, and organize purchase receipts, transfer records and an overview of old transactions together. Tools from encryption software comparisons can combine the acquisition records with the settings extracted values the tax bureau wants to see to justify it.
2. Move retracted positions into your own custody. What comes out of the program does not have to fall into the next trading account. Hardware wallet devices can move positions out of every future bankruptcy estate, and the transfer to your own address is not itself a taxable event.
3. Select future trading venues based on authorization and custody segregation. Whether the right to withdraw the right at a critical moment was determined several years ago by the issue of whether the client's positions were kept separately. Our overview of regulated crypto exchanges shows which providers are subject to European supervision.

(As of October 7, 2026. This article does not constitute investment advice. Price and fee structures are subject to change; please check terms with your provider before purchasing.)