Late reporting of cryptocurrency gains in Germany: Why voluntary disclosures under Article 371 still

What are the consequences if the proceeds of Bitcoin or other crypto assets are not declared in early German tax returns?

If you fail to declare income from Bitcoin or other crypto-assets in your early German tax return, you face a clear question: Voluntary disclosure under Section 371 of the German Tax Code exempts you from criminal liability only if the violation is not discovered and there is no legal impediment. Currently, this window period is gradually narrowing.

The German Crypto Asset Tax Transparency Act came into effect on January 1, 2026. During the 2027 calendar year, encryption service providers will transfer data for the 2026 reporting period to the Federal Central Tax Office for the first time. This article will explain how follow-up declarations work in practice, which years are still open, why voluntary disclosures fail, and the costs involved. This article does not constitute professional advice: voluntary disclosure is a document with criminal law consequences and should be handled by a professional tax accountant or lawyer proficient in tax law. If you draft your own documents and omit any year or any exchange, you will lose your immunity for all content.

Why will your encrypted data be stored at the Federal Central Taxation Office starting from 2027

The Cryptographic Asset Tax Transparency Act, referred to as KStTG, was passed on December 22, 2025, transforming the EU DAC8 Directive into German law. DAC 8 is the eighth version of the EU Administrative Cooperation Directive; it extends the scope of the automatic exchange of information between tax authorities to include crypto-assets. The reporting obligation lies with the service provider itself: the exchanges, brokers, custodians and intermediaries that exchange or transfer crypto assets for customers. Investors themselves do not need to report anything to the authorities.

According to the Federal Central Administration of Taxation, the report includes aggregated transaction data for wallets, as well as names, addresses, tax resident identities, tax identification numbers, date of birth and transaction volumes. Service providers are required to submit data to the Federal Central Taxation Service by July 31 of the following calendar year, which will forward the data to partner countries in the EU Central Register and international frameworks by September 30. The first of these transfers covers 2026 and will take place in 2027.

For day-to-day matters, this means two things. First, service providers have begun requesting tax resident identities and tax identification numbers; anyone who does not respond expects their accounts to be restricted. Secondly, starting from 2027, the tax bureau will hold a large amount of data that can be matched with the return you submit. Data matching is not a criminal procedure, but it is a way to discover differences.

What not done in the 2026 annual report year

The report covers 2026 and beyond. It will not conduct retrospective analysis from 2017 to 2025. This is the most common misunderstanding in the field and can lead to wrong conclusions in both directions. Those who think old years are automatically exposed need not panic. Those who believe that old years are safe because of this underestimate how tax authorities have in the past requested user lists from individual trading platforms through collective information requests.

Section 153 Correction and Section 371 Voluntary Disclosure of the Tax Code: What's the Difference

Both paths are used to correct incomplete tax returns, but they start from different points and have different consequences.

The notification and correction obligations under Section 153 of the Tax Code apply where a person subsequently becomes aware before the expiration of the assessment period that the return submitted is incorrect or incomplete and may therefore result in underpayment of taxes. The wording of the regulations requires notification "without delay", that is, without any imputable hesitation. This refers to unintended situations: an item is ignored, an exchange is forgotten, and a swap is mistakenly regarded as tax-exempt.

In contrast, voluntary disclosure under Section 371 of the Tax Code applies to cases involving tax evasion, i.e. intentional conduct. You are exempt from prosecution if three conditions are met: full correction of all unimpeded tax offences for a tax in the past ten calendar years, absence of obstruction, and timely payment of tax evasion and interest.

In practice, the line between the two situations is often unclear because intention is an internal fact. As a result, consultants often structure corrections to also meet the requirements for effective voluntary disclosure. This is the real reason why a self-drafted letter to the Revenue Service can be dangerous: it may meet the requirements of section 153, but not meet the integrity required by section 371.

Whether a correction is converted into criminal proceedings depends on the cause of obstruction and the year in which integrity

must be declared: the evaluation period and the statute of limitations for action on proceeds of crypto assets

coexist and are often confused. One determines whether the tax authority can still assess the tax, and the other determines whether violations can still be prosecuted.

The evaluation period is stipulated in Article 169 of the Tax Code. For income tax, it is usually four years. Extend to five years in the case of reckless understatement of taxes and to ten years in the case of tax evasion. There is also an initial suspension period: this period begins only at the end of the year in which the return is submitted, and no later than three years after the tax year. Therefore, if you have never submitted a return for 2018, you must expect that assessment will remain open for that year.

The statute of limitations under criminal law follows its own rules and has nothing to do with whether back taxes are required. The practical consequence is that even if there is no threat under criminal law, a certain year may still be open to taxes. Taxes and interest still need to be paid.

How to calculate the year open in your case

The starting point is not eye-catching: Find out your personal tax assessments over the past ten years and tie your transaction history with them. What matters is the point in time of each sale and each swap; the year-end account balance has nothing to do with it. For tax purposes, exchanging one coin for another counted as a disposal of the first coin, although no euro changed hands. It is these swaps that most often appear missing on old returns because they don't feel like they are for sale.

Obstacles in Article 371(2): When voluntary disclosure is too late

If any impestacles listed in the statute have occurred, it does not have the effect of exempting prosecution. These include notification of audit orders under Section 196 of the Tax Code, notification that criminal or administrative penalty procedures have begun, the presence of tax audit officers, and discovery of violations when the offender knew or should have foreseen them. As a separate impediment, this applies once the underpayment of taxes exceeds € 25,000 for each offence.

The impediments to "discovery" are why the 2027 reporting process is crucial to this topic. An offence is deemed to have been discovered when the authorities have sufficiently specific suspicions to make a conviction possible. Therefore, comprehensive data matching does not automatically constitute a discovery. However, anyone who has received an email from the Inland Revenue Office about a specific crypto transaction should assume that the clock has stopped running and seek advice before sending any other letters.

The impediments to audit orders are also underestimated. It is for the audit period and takes effect from the date of notification, not just the date the audit begins. Anyone with an on-site audit announcement in the mailbox who subsequently writes a voluntary disclosure will not be able to achieve immunity from prosecution for the year audited.

Completeness rather than partial disclosure: Why half corrections fail

There have been no valid partial voluntary disclosure since 2011. The law requires a comprehensive correction of all tax offences for a tax within the last ten calendar years. Translation: Anyone who reports only the earnings of a single exchange and omits the account of a second provider does not make a valid voluntary disclosure, but provides partial evidence to the authorities.

This is the most difficult requirement for crypto positions because traces are scattered everywhere. The typical situation is a large exchange, a smaller secondary account from the early days, a decentralized application, a pledge service and a hardware wallet whose transactions do not appear in any report. If one of the sources is missing, it is also missing in the declaration.

If you need to build an overview first, the wise approach is to use portfolio and tax tools that combine transactions from multiple sources and generate annual reports. Which providers can import which exchanges, wallets, and protocols are shown in our comparison of crypto tax software and portfolio trackers. The tool does not replace advice, but it provides a digital foundation that no consultant could work without it.

The most common mistake: The first forgotten exchange

Many positions started in small accounts between 2017 and 2021, usually with providers that had exited the market or were acquired by other companies. This is where the purchase determines the cost of later sales. Without these data, there is no way to prove the benefits, and the tax bureau will estimate the benefits without proof.

Starting from tax evasion of € 25,000 per offence: Surcharges under Section 398a

If the tax underpaid exceeds € 25,000 per offence, the exemption from prosecution will expire. As a result, the case was not lost: Section 398a of the Tax Code stipulates that prosecution will be waived if tax evasion and interest are paid and additional amounts are settled on top. According to the wording of the regulation, this surcharge is 10% of the amount of fugitive tax up to 100,000 euros, 15% between 100,000 and 1,000,000 euros, and 20% above 1,000,000 euros.

If the process is later reopened, the surcharge is not refundable; however, it can be used to offset the penalty. The decisive factor is tax evasion, not income, and certainly not portfolio value. If you fail to declare a gain of € 40,000, the tax on that gain will usually fall below the threshold, depending on your tax rate.

What records do you need to obtain from exchanges, wallets and tax instruments

Subsequent reporting is ultimately a arithmetic exercise with supporting evidence. What is needed each year is a complete list of transactions with time stamps, acquisitions and disposals matched in the order of acquisition, and prices and fees for the relevant time. It also includes transaction records that are not counted in sales but are still counted in taxes: pledge income, loan interest, airdrops and mining rewards.

You obtain your trading history from the trading platform itself, which is usually provided as a file in the account area. Anyone with an account with a closed provider needs a support route and should start as early as possible. An overview of regulated trading venues, including the question of who issues available annual declarations, in our comparison of crypto exchanges. For wallets without providers behind them, only the blockchain itself is helpful: collecting addresses, exporting transactions, and explaining inflows.

A practical tip about sequencing: First build the data foundation, then calculate, and then draft. Conversely, you will face the exact incompleteness that caused the immunity suit to fail before analyzing the letter sent to the tax bureau. By the way, the data base also determines whether your position can justify tax-free sales after the one-year holding period has passed.

What has changed in the draft bill of September 8, 2026

On September 8, 2026, a draft bill from the German Federal Ministry of Finance was known. The bill will regard crypto assets as investment income in the future, and a 25% proportional withholding tax plus a solidarity surcharge will apply regardless of the holding period. According to the draft, the new rules will only apply to positions acquired after December 31, 2026; positions acquired before then will still be retained for a one-year holding period. Automatic tax deductions for service providers will not be envisioned until 2028 (envisaged).

None of this has yet become law. Draft bills are working documents of ministries, not laws; coordination within the federal government is ongoing and no bills are submitted to the Bundestag. For the current year 2026, Article 23 of the Income Tax Law and its one-year holding period rule remain unchanged.

Regarding the issue of subsequent declarations, the draft does not change the previous legal status. It changes the sense of urgency because it directs the attention of tax administration to an area that becomes transparent anyway. Therefore, people with open years do not choose between two tax regimes, but choose between proactive corrections and corrections when required.

The evaluation period continues to run regardless of whether new laws arrive.

Interest and costs of tax evasion: The true cost of subsequent declarations

The payment itself is only the first item. Interest follows, and it's worth taking a closer look at the regulations here. Since 2019, interest on additional tax claims under Section 233a of the Tax Code has been at 0.15% per month, or 1.8% per year. For residual interest under the Tax Code, including tax evasion interest under Article 235, 0.5% per month, or 6% per year, continues to apply. Eight or ten years add up to a considerable amount, and paying interest is a condition for exemption from prosecution, not a subsequent side effect.

Then there is the cost of consulting. They depend on the level of rebuilding effort, not the value of the portfolio; positions with twenty transactions can be processed in a few hours, while positions with thousands of transactions across five platforms are not. By cleanly preparing the data foundation yourself, you will significantly reduce this project.

What happens if you do nothing

The current assessment remains unchanged. If an audit is subsequently carried out, the grounds for obstruction are in effect, immunity from prosecution is lost, and criminal proceedings are looming (imminent) in addition to taxes and interest. For amounts below the minimum threshold, such procedures usually end on monetary terms; above this threshold, they do not. As long as the evaluation period is in operation, the taxes will not disappear in these circumstances.

Encrypted follow-up declarations: Summary of key points

The legal status is confusing; the next step is not complicated.

Organize your data base before writing anything to the tax office.

Collect and consolidate the transaction history of all accounts and wallets over the past ten years. Which tools import multiple sources and issue annual reports are shown in our comparison of crypto tax software and portfolio trackers.

Request missing records now, not later.

Exports from closed or acquired trading centers take weeks. Which providers provide available annual declarations are set in our crypto exchanges comparison.

Once the numbers are in place, ask a professional to draft the declaration.

Integrity across all years and all sources determines immunity from prosecution and cannot be repaired afterwards. Calculate the expected tax burden in advance, such as using the tools in our crypto tax software comparisons, so that back tax plus interest does not become a second surprise.

The legal basis can be read in the original wording: see Section 371 of the Tax Code for voluntary disclosures and the Federal Central Revenue Service for reporting procedures.

(As of September 12, 2026. This article does not constitute investment advice, nor does it constitute tax or legal advice. Price and fee structures are subject to change; please check terms with your provider before purchasing.)