Gifting & inheriting Bitcoin: tax, allowances, deadlines

Giving or leaving bitcoin to someone involves two taxes – income tax and gift or inheritance tax – and a duty to notify the tax office. How your relatives can actually access your bitcoin in an emergency is covered in Inheritance & emergency plan.

Two taxes, two questions

Question	Law	Answer
Is this a sale that triggers income tax?	§ 23 Income Tax Act (EStG)	No. The holding period keeps running for the new owner.
Is the enrichment taxed?	Inheritance and Gift Tax Act (ErbStG)	Only to the extent that the value exceeds the personal allowance.

Income tax on price gains requires a private disposalGlossaryPrivate disposal transaction (privates Veräußerungsgeschäft)A German tax term from § 23 EStG: if you sell or swap privately held bitcoin within one year of buying them, the gain is taxable – unless all such gains in that year together stay below the €1,000 exemption limit.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →×, i.e. a transfer in return for payment – for money, goods or other crypto assets.^[2] A gift involves no payment. Under the ErbStG, gifts and inheritances are largely subject to the same tax classes and allowances.^[3]

The holding period keeps running

If you receive bitcoin as a gift or inheritance, the law attributes the previous owner’s acquisition to you.^[1],[2] So the one-year holding periodGlossaryHolding period (speculation period)In Germany, the gain from selling privately held bitcoin is tax-free if more than one year passes between purchase and sale (§ 23 EStG, as of September 2026). Each purchase has its own holding period.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →×, after which a sale is tax-free, does not start again.

The recipient therefore needs your purchase records showing the purchase date and price. Without them, they can hardly prove when the holding period ends or how large their gain is; missing evidence usually counts against them.^[2]

Example: the period simply keeps running

A mother buys 0.2 BTC and later gives them to her daughter. The prices are sample prices; we calculate in euros here because the German tax office does.

1. 15 Mar · year 1

   The mother buys

   0.2 BTC at €70,000 per BTC – acquisition cost €14,000.

2. 5 Nov · year 1

   Gift to the daughter

   Price €74,000, so the gift is worth €14,800. For the mother, this is not a sale. The amount is far below the daughter’s €400,000 allowance, but must be reported within three months.

3. 16 Mar · year 2

   Tax-free sale possible

   The one-year period ran from the mother’s purchase and ended at the close of 15 March. From now on, the daughter can sell the 0.2 BTC tax-free under current law.

If the daughter sells as early as February of year 2, at €80,000, her gain is €16,000 − €14,000 = €2,000. She pays tax on it, not her mother. The exemption limitGlossaryExemption limit (€1,000 Freigrenze)In Germany, gains from private disposal transactions stay tax-free if they total less than €1,000 in a calendar year. From €1,000, the entire gain is taxable.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →× doesn’t help here: only a total annual gain of less than €1,000 stays tax-free.^[2] How the period is calculated in detail is explained in Bitcoin & tax in Germany; you can work through several purchases in the holding-period calculator.

Allowances: it depends on the relationship

The allowance and the tax rate depend on the tax class.^[3] The allowances apply in full if at least one side lives in Germany (unlimited tax liability):^[7]

Who receives the bitcoin?	Tax class	Allowance
Spouse, registered civil partner	I	€500,000
Children, stepchildren, children of deceased children	I	€400,000
Grandchildren	I	€200,000
Parents and grandparents – only for an inheritance	I	€100,000
Parents and grandparents for a gift, siblings, nieces and nephews, parents-in-law and children-in-law, divorced spouses	II	€20,000
Everyone else, e.g. unmarried partners, friends, godchildren	III	€20,000

Each allowance applies per person you receive something from, and for ten years. A child can therefore receive up to €400,000 tax-free from their mother and the same again from their father.^[6],[7]

Dive deeperWhich tax rates apply above the allowances?

The rate depends on the tax class and the size of the taxable acquisition, and it applies to the entire taxable amount. A hardship rule softens jumps just above the thresholds.^[3]

Taxable acquisition up to and including	Class I	Class II	Class III
€75,000	7%	15%	30%
€300,000	11%	20%	30%
€600,000	15%	25%	30%
€6,000,000	19%	30%	30%
€13,000,000	23%	35%	50%
€26,000,000	27%	40%	50%
above that	30%	43%	50%

On inheritance, the surviving spouse also receives a maintenance allowance (Versorgungsfreibetrag) of €256,000; children up to the age of 27 receive between €52,000 and €10,300, depending on age. It is reduced by tax-free survivors’ benefits, such as statutory survivors’ pensions.^[3]

Which value counts: the price on the valuation date

• Gift: the tax arises when the gift is made.^[4]
• Inheritance: the tax generally arises on the death of the deceased.^[4]

Valuation is made at that point,^[5] at the ‘fair market value’ (gemeiner Wert) – the price that could be obtained in a sale in the ordinary course of business.^[9] For bitcoin, that is the market price in euros on that day. The law does not prescribe a particular price source, so record the price, source, date and time, for example with a screenshot. For orientation: 1 BTC currently costs $85,533 (€76,470). For a past valuation date, such as the day of death, the price history on the chart sites below will help.

If the price falls after the valuation date, the valuation doesn’t change. This can hit heirs of larger holdings in particular: the tax is still based on the higher value on the valuation date.

Dive deeperWhen is a gift of bitcoin considered ‘made’?

The law links the tax to the gift being made; there is no specific rule for Bitcoin.^[4] As we understand it, the gift is made as soon as the recipient can dispose of the bitcoin themselves – typically when the transaction has arrived in their wallet.

The 10-year rule: earlier gifts count too

Several acquisitions from the same person within ten years are added together, earlier ones at their value at the time.^[6] This has nothing to do with the one-year holding period.

Worked example: two gifts to a godchild

Godchildren fall into tax class III with a €20,000 allowance.^[7] Sample prices, amounts in euros.

	Amount	Price per BTC	Value on valuation date
1st gift, year 1	0.5 BTC	€9,000	€4,500
2nd gift, year 7	0.3 BTC	€74,000	€22,200
Added together			€26,700
minus allowance			− €20,000
Taxable			€6,700
Tax (class III, 30%)			€2,010

In year 7, the 0.5 BTC from year 1 would be worth €37,000, but they only count at the €4,500 they were worth then. If the first gift were more than ten years back, it would drop out entirely: only €2,200 would then be taxable.^[6] If an earlier gift already triggered tax, that tax is credited so that nothing is taxed twice.^[6]

Duty to notify: telling the tax office

Every acquisition covered by the ErbStG must be reported in writing to the tax office responsible for inheritance tax within three months – for a gift, by the giver as well. Among other things, the notification should include the names and tax IDs of both sides, the date, the object and its value, and any earlier gifts from the same person.^[8]

• Even below the allowance: according to the Bavarian tax administration, a value below the allowance does not exempt you from notification, because the allowance applies only once every ten years.^[10]
• Exceptions: customary occasional gifts that clearly don’t lead to any tax,^[10] and gifts notarised or recorded by a court.^[8]
• On inheritance, the deadline runs from when you learn of your acquisition. No notification is needed if you inherit under a will opened by a German court or notary that clearly shows your relationship to the deceased – unless the estate includes, for example, real estate, business assets or foreign assets.^[8],[10]
• Who pays? The recipient or the heir; for a gift, the giver is also liable for the tax.^[3]

Reporting is worthwhile even when no tax is due: for a gift, the time limit for assessing the tax (Festsetzungsfrist) starts at the earliest at the end of the year in which the tax office learns of it or the giver dies.^[11] A gift that is never reported can therefore still become an issue decades later. What data providers report to the tax office is explained in DAC8 & reporting obligations.

How to give bitcoin properly

1. Set up the recipient’s own wallet

   The recipient writes down and secures the seed phraseGlossarySeed phrase (recovery phrase)A sequence of usually 12 or 24 words from which your wallet derives all its private keys. Anyone who knows the words has full access to your bitcoin – so they belong in an offline backup and never in anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× themselves, not you – that is the only way they truly control their bitcoin. Instructions: Setting up your first wallet.

2. Check the address and start with a test amount

   Compare the receiving address character by character and send a small amount first – Bitcoin transactions cannot be reversed. If you send from an exchangeTermExchange (crypto exchange)A trading platform where buyers and sellers trade bitcoin with each other via an order book.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →AdLicensed providers with a paid linkProviders from our comparisonKrakenExchange · MiCA (Central Bank of Ireland)Visit Kraken* (paid link, opens in a new window)BitvavoExchange · MiCA (AFM, Netherlands)Visit Bitvavo* (paid link, opens in a new window)CoinbaseExchange · MiCA (CSSF, Luxembourg)Visit Coinbase* (paid link, opens in a new window)All 7 compared – including non-partners →*Paid link: if you sign up or buy through it, we earn a commission. Your price stays the same. How we make money →18+ · Crypto assets are highly volatile; you could lose all your money. No deposit protection.× to a self-hosted wallet, the provider records details about you and the recipient under the Travel RuleGlossaryTravel Rule (Transfer of Funds Regulation)An EU rule requiring crypto providers to send details of the sender and recipient with transfers. Since 30 December 2024, for more than €1,000 from or to your own wallet, the provider also checks that the address is yours.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×.^[14] How it works: Your first withdrawal to your own wallet.

3. Record the value on the valuation date

   Once the bitcoin have arrived, note the date, time, amount, euro price and price source, plus a screenshot and the transaction ID.

4. Pass on your purchase records

   Copies showing the purchase date and price of the bitcoin you gave – the recipient needs them for their holding period.^[1]

5. Put it briefly in writing

   A gift completed immediately doesn’t need a notary: the formal defect of a mere promise of a gift is cured by the transfer.^[13] A short note signed by both of you (who, when, how much BTC, to which address) still serves as evidence.

6. Report it to the tax office

   Within three months, in principle even below the allowance; both sides are obliged. Include any earlier gifts from the same person.^[8],[10]

And if bitcoin are inherited?

For tax purposes, the same applies as for a gift, except that the valuation date is usually the day of death,^[4],[5] and parents and grandparents have a higher allowance.^[7] If heirs sell before the continuing one-year period has ended, income tax may also be due on the gain over the deceased’s purchase price.^[1]

The bigger hurdle is often a practical one: if the bitcoin are in self-custodyGlossarySelf-custodyYou hold the private keys to your bitcoin yourself – in your own wallet rather than with a provider. Nobody can freeze your bitcoin. But nobody can help you if you lose your seed phrase and keys.On the learning path: Stage 5 · Step 1 – Understanding custody →In the glossary →× and nobody finds the backup, they are lost. How to plan ahead without weakening your security today is explained in Inheritance & emergency plan.

Your checklist

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