Bitcoin for a gift card: the tax rules

Swapping Bitcoin for a gift card is not a purchase for tax purposes, it is a sale. The moment you pay for a gift card, a good or a service with crypto assets, you hand over the coins and receive something else in return. The tax office treats that transaction exactly like a sale on an exchange: as a private disposal under section 23 of the German Income Tax Act, the EStG.

Whether tax actually falls due hangs on two numbers. If more than twelve months lie between the purchase and the gift card payment, the gain stays tax free. Below that it counts, and it counts together with every other private disposal of the year against the threshold of 1,000 euros. So if you buy Bitcoin in January and pay for a gift card with it in March, you have a tax relevant transaction on the books, even though not a single euro has landed in your account.

The gift card purchase is a disposal, not an exchange

A disposal within the meaning of section 23 EStG is any transfer of an asset for consideration. The fact that what you receive in return is a gift card rather than euros changes nothing: for consideration simply means that something flows the other way. On February 14, 2023, the Federal Fiscal Court confirmed that crypto assets are other assets in this sense and fall under the provision.