The following article is a summary of CryptoTax’s elaboration on the extension of the speculation period for cryptoassets. It was written by Klaus Himmer, CEO and Co-Founder of CryptoTax. Further information on this topic can be found at

The background to the debate is the wording of Section 23 (1) sentence 1 no. 2 sentence 4 EStG:

„In the case of [private] assets within the meaning of sentence 1, the [speculative] period is increased to ten years if they are used as a source of income in at least one calendar year.

Since a grammatical interpretation leaves little room for interpretation, it is widely held that this provision also applies to crypto currencies.

The extension of the speculation period – an anti-abuse provision

The extension can be traced back to the 2008 Corporate Tax Reform Act and was introduced on the basis of tax-saving models – so-called container leasing models. Special purpose vehicles sold containers to private investors and offered them rental contracts and often a fixed surrender value at the end of the lease term. The investors generated rental income with the containers, which for tax purposes represents income from other services within the meaning of § 22 No. 3 EStG, as containers are also regarded as private assets. The investors were able to reduce the rental income by a so-called deduction for container wear and tear (AfA).

This is intended to reflect the depreciation of the asset and is measured on the basis of the normal useful life. The useful life is generally determined by the individual circumstances of the asset. In order to facilitate the procedure in practice, there are additional flat-rate data for types of assets in so-called depreciation tables of the Federal Ministry of Finance. Transport containers therefore have a flat-rate useful life of ten years.

The income from other services within the meaning of § 22 No. 3 EStG can thus be reduced annually by the flat-rate depreciation of ten per cent of the acquisition costs of the container, which regularly did not correspond to the actual wear and tear of the containers and was shown by the fact that the agreed surrender value was considerably higher than the tax book value.

Does it make sense to apply it to crypto currencies?

However, the lump-sum depreciation usually only has a temporary effect, as a discrepancy between the tax book value and the actual market value is taken into account at the latest when the asset is sold as part of a private sale transaction by adjusting the acquisition costs accordingly. Since, prior to the 2008 Corporate Tax Reform Act, sales of private assets were tax-free after one year without exception and the depreciation discrepancy was therefore not taken into account for tax purposes, such container leasing models became attractive investment and tax-saving models.

The extension of the speculation period to ten years was intended to make such models unattractive and thus constitutes a tax avoidance regulation. A teleological interpretation of the standard, taking into account the intention to legislate, thus clearly shows that the extension of the deadline cannot be applied to non-depreciable digital assets.

In the social media and other information media, there has recently been increasing discussion as to whether the holding period for income generation through the use of Bitcoin, ether or other crypto currencies should be extended from one year to ten years. Income can be achieved with cryptoassets by different possibilities. On the one hand, users can actively participate in the block discovery processes. Through the various consensus protocols, staking can also be used in addition to mining to generate passive income.

Furthermore, decentralized network nodes based on a remuneration structure can also generate income. Crypto currencies such as Dash, PIVX or Zcoin have implemented master nodes in the existing system for this purpose. Since these sources of income are at the same time an essential basis for the functionality of the blockchain-based systems shown, a tenfold increase in the holding period in Germany would have a dampening effect on the spread of these innovative technologies and thus on Germany as a technology location in addition to the effect on the investment behavior of investors.