Crypto Lending Ruling: German Court Determines Personal Tax Rate Applies

The Cologne Tax Court in Germany has made a ruling on crypto lending tax that could have significant implications for investors. In a case decided on September 10, 2025, the court determined that income from crypto lending should be taxed at the individual's personal rate, rather than the flat withholding tax rate.

The court's decision is based on Section 22(3) of the Income Tax Act, which covers income from services. The ruling does not apply to interest income, which falls under a different section of the law and is subject to a separate tax rate.

For investors who lend out their crypto assets and receive fees in return, this means that they should report their income on Annex SO of their tax return, rather than Annex KAP. This can have important implications for how taxes are calculated, particularly if the investor has other sources of income or expenses to consider.