Germany's Crypto Transparency Act Closes Window on Unreported Gains

In Germany, crypto asset owners can still avoid prosecution for unreported gains through voluntary disclosure under Section 371 of the German Fiscal Code. However, this window is getting shorter as the Crypto Asset Tax Transparency Act comes into effect on January 1, 2026.

The act requires service providers to transmit aggregated transaction data to the Federal Central Tax Office by July 31 of each year, starting in 2027. This data will be matched against tax returns filed by investors, increasing the likelihood of discrepancies being detected.

A voluntary disclosure under Section 371 is only possible if three conditions are met: full correction for all unbarred tax offences over the last ten calendar years, no blocking ground, and timely payment of evaded tax plus interest. The blocking grounds include notification of an audit order, notification that criminal or administrative fine proceedings have been opened, appearance of an official for a tax audit, discovery of the offence where the offender knew of it or had to reckon with it.

Investors should not rely on self-drafted letters to the tax office, as these may satisfy Section 153 requirements but fall short of completeness demanded by Section 371. A correction that turns into criminal proceedings is decided by blocking grounds and completeness.