Staking Taxes in Germany: The Inflow, the 256-Euro Threshold and the Holding Period

The key points at a glance

• Two moments, two taxes: staking is taxed when the reward arrives and taxed again when you later sell it. Anyone thinking only about the sale is missing half the picture.
• The inflow is income from other services under Section 22(3) of the German Income Tax Act (EStG), valued at the market price at the moment it arrives and charged at your personal tax rate.
• A threshold of 256 euros a year. It is a threshold, not an allowance: one euro above it makes the entire amount taxable. It has nothing to do with the 1,000 euros under Section 23.
• Twelve months, not ten years. The extended holding period has been cleared up by the tax authorities. Every reward you receive starts a period of its own on the day it arrives.
• The market value on arrival becomes your acquisition cost. That is why a later sale is taxed only on the change in value since the inflow, and not on the whole proceeds.

Why staking is taxed twice

With staking, the most common misunderstanding concerns the number of taxes rather than their size. Two separate events take place, and for tax purposes they sit in different worlds.

The first event is the reward itself. It reaches you without you selling anything. In tax terms this is a service for which you receive a consideration: you make capital available to the network, and the network pays for it. That income belongs to the other services covered by Section 22(3) of the German Income Tax Act.