Donating bitcoin: when does the full market value count, when only the purchase price?

A bitcoin donation to a charitable organisation is tax-deductible in Germany, and it counts as a donation in kind. How much you may deduct turns on a single question that is written into the law and that hardly anyone else mentions: would a sale of this bitcoin have been taxable at the moment of the donation?

If the answer is no, because the one-year holding period has elapsed, you may use the fair market value, that is the price on the day of the donation. If it is yes, because you bought the bitcoin only eight months ago, the deduction is capped at the carried-forward acquisition cost, meaning what you paid. On a position that has quadrupled, that is a difference of a factor of four, purely because of the date.

This rule is in section 10b paragraph 3 of the German Income Tax Act. Because the donation itself is not a sale, it also produces no taxable gain. The two together lead to a result that surprises many: donating out of an old holding sitting on a large gain is more favourable for tax than the detour through a sale.

The donation itself produces no taxable gain

Private disposals of crypto assets fall under section 23 of the Income Tax Act. What is taxable there is a gain from a disposal, and a disposal presupposes consideration. A donation is gratuitous: you give the bitcoin away and receive nothing for it. The trigger to which the tax attaches is therefore absent.

The law itself confirms this logic in a telling place. Section 10b paragraph 3 asks whether the disposal of the asset transferred "would not fulfil a taxable event at the time of the transfer". The question is put in the subjunctive, and is therefore hypothetical. If the transfer were itself already a disposal, that subjunctive would not be needed.

The same system applies to other gratuitous transfers. Anyone giving bitcoin away as a gift likewise triggers no private disposal; what comes into play there instead is gift tax and its allowances, which we have written up separately for the case of gifts to children. On a donation to a tax-privileged organisation no gift tax arises, because charitable recipients are exempt from it.

Section 10b paragraph 3: the deductible amount hangs on the holding period

The decisive mechanism in sentences 3 and 4 of the provision can be set out in two lines.

Case one, holding period elapsed. A sale would have been tax-free on the day of the donation, because more than a year lies between acquisition and donation. The amount of the transfer is then determined by the fair market value, that is the price.

Case two, holding period still running. A sale would have been taxable. In determining the amount of the transfer, the carried-forward acquisition cost may then not be exceeded. The increase in value is thus left out of the deduction.

The provision can be read in full at section 10b of the Income Tax Act, and the holding period itself at section 23. Note one subtlety here that is often overlooked: for case two it does not matter whether you would in fact have made a gain on a sale. What counts is whether the taxable event would be fulfilled, and within the year it is, regardless of the outcome.

A second subtlety concerns the 1,000-euro exemption threshold in section 23. This threshold does not undo the taxable event; it merely leaves the gain free in the result. Anyone wanting to rely on a donation within the year being treated as case one for that reason is on uncertain ground; we have collected the most common errors of reasoning around this threshold in a separate piece on the exemption threshold.

A worked example with 20,000 euros of cost and 80,000 euros of market value

Suppose you bought bitcoin for 20,000 euros, and the position stands at 80,000 euros on the day of the donation. Both figures are freely chosen, to show the mechanics.

• Donation after fourteen months: a sale would be tax-free. 80,000 euros are deductible as a donation in kind.
• Donation after eight months: a sale would be taxable. 20,000 euros are deductible.

The difference comes to 60,000 euros of special expenses, on an identical donation to an identical recipient. What that amount saves in tax depends on your personal tax rate and on the ceiling, on which more below. The direction, though, is the same in every case: six months of patience decide the order of magnitude of the deduction here.

Selling and then donating cash: this route can trigger tax

The obvious route is often the more expensive one. Anyone who first sells the bitcoin on an exchange and then transfers the euro amount has triggered two separate operations: a sale and a cash donation.

Within the one-year period that sale is a private disposal, and the gain is charged at your personal income tax rate. The cash donation that follows is deductible in the amount donated, but it works as a special expense and not as an offset against the gain. Once the one-year period has elapsed the sale is tax-free, and then both routes lead to the same result.

A plain rule of sequence follows from this: if the acquisition is less than a year back, the direct donation in kind is the cleaner route for tax, even if the deduction then covers only the acquisition cost. Anyone who sells instead pays on the gain and donates from what is left after tax.

Who qualifies as a recipient and where to check it

Deductible are transfers for the promotion of tax-privileged purposes under sections 52 to 54 of the Fiscal Code. As recipients the law names three groups: legal persons under public law and public bodies, corporations exempt from tax under section 5 paragraph 1 number 9 of the Corporation Tax Act, and corresponding institutions in another member state of the European Union or in the European Economic Area.

In practice that means the association or foundation has to be recognised as charitable. A collective appeal by a loose initiative, a project without a legal form or a wallet address in a forum post do not meet that condition, however worthwhile the cause may be. The purpose alone is not enough; what matters is the recipient's recognised status.

It can be checked with the recipient itself: a charitable organisation evidences the status on request and issues the confirmation you need for the deduction. Anyone who cannot or will not issue a confirmation cannot accept a deductible donation either.

Donation receipt on the official template, simplified proof up to 300 euros

For the deduction you need proof. Above 300 euros that is the donation receipt on the official template, issued by the recipient. Up to and including 300 euros a simplified proof suffices, if the recipient is a domestic legal person under public law, a domestic public body or a corporation exempt from tax under section 5 paragraph 1 number 9 of the Corporation Tax Act.

With a donation in kind the confirmation has a peculiarity that regularly prompts questions with crypto assets: the value of the item has to be stated in it, and that value is exactly the amount the rule in section 10b paragraph 3 prescribes. The recipient, however, does not know your acquisition data. In practice the donor therefore supplies the details on which the organisation bases its confirmation: date of acquisition, acquisition cost, quantity and the market value on the day of the transfer.

That makes your own records a precondition of the deduction. Anyone whose purchases are spread across several exchanges and wallets should pull the history together in full before donating; which programmes do that automatically and build a report for the tax office is set out in our comparison of crypto tax tools. If the purchase record is missing altogether, no evidenced deductible amount is left on a donation within the one-year period, because without acquisition cost there is no ceiling that could be substantiated. The trade statements can usually still be obtained after the fact in your trading venue's account; which providers export how far back is shown by our exchange comparison.

20 percent of total income as the ceiling

The deduction is not unlimited. Transfers are deductible in total up to 20 percent of total income, or alternatively up to 4 per mille of the sum of turnover, wages and salaries. For a private individual without a business, the first limit is as a rule the relevant one.

With a large donation in kind out of an old holding, that limit is quickly reached. Anyone donating 80,000 euros with total income of 70,000 euros can apply only 14,000 euros in that year. The remainder is not lost, though: deductible transfers above the ceilings are carried forward into the following years, the so-called donation carry-forward.

For planning purposes that means a very large donation works for tax across several years. With a gain that has accrued over years that is an important point, because unlike the increase in value the deduction is tied to your current income. How losses and other deductible items work alongside it, we have written up using the example of a total loss.

What happens if the organisation sells the bitcoin immediately?

Many recipients hold no crypto assets but convert a donation into euros straight away. For your deduction that changes nothing. What counts is the time of the transfer, that is the moment the bitcoin arrives at the organisation, and what counts is the value at that moment.

If the charitable organisation then sells, that is its operation and not yours. The proceeds it achieves may lie somewhat above or below the value on the day of transfer because of price movement. For the confirmation the value on the day of transfer applies, and you hold to that value in your tax return as well.

A clean delineation matters with donation portals and payment service providers. If the transfer runs through a service provider that accepts the crypto asset, sells it and passes on the euro amount, the question arises as to who your recipient actually was. A deductible donation in kind presupposes that the charitable organisation receives the crypto asset. If it is converted into euros first and only the euro amount is transferred, what exists economically is a cash donation, and section 23 then applies to the sale again.

Membership fees and sports clubs: where the deduction stays excluded

The law treats donations and membership fees in the same sentence, but draws a series of limits around the fees. Not deductible are membership fees to corporations that promote sport, to corporations for cultural activities that primarily serve leisure, and to corporations for the care and study of local heritage.

Genuine donations to those very same clubs, by contrast, remain deductible. Anyone transferring bitcoin to the local sports club can claim that as a donation; the annual fee for membership, on the other hand, stays out. Membership fees to corporations promoting art and culture are expressly deductible, even where members are granted benefits in return.

For a crypto donation this distinction is rarely the problem, because a membership fee is hardly ever paid in bitcoin. It becomes relevant where a club books a transfer flatly as "support". If the confirmation ends up saying membership fee instead of donation, the deduction is lost for the purposes named.

Crypto donations abroad and the limits of the European Economic Area

That a blockchain transfer does not stop at borders changes nothing about the tax border. The recipient has to be located domestically, in a member state of the European Union or in a state of the European Economic Area. A transfer to an organisation outside that area is not deductible under section 10b, however easily the transfer may be made technically.

With recipients not resident domestically a further hurdle is added: the state in question has to provide administrative assistance on the exchange of information and support with recovery. If a domestic public body pursues the privileged purposes exclusively abroad, the law additionally requires that persons resident in Germany are supported, or that the activity can also contribute to the standing of the Federal Republic.

In practice, the route through an organisation recognised in Germany that works abroad is therefore almost always the more workable one than a direct transfer to an institution in a third country. The first variant gives you a confirmation the tax office knows.

From 2027 the draft bill shifts this calculation

The rule in section 10b paragraph 3 attaches to the question of whether a sale would be taxable at the time of the transfer. That is precisely the question the federal finance ministry's draft bill on the taxation of crypto assets, due to go to cabinet on October 14, 2026, intends to answer anew.

If the one-year holding period falls away for holdings acquired after December 31, 2026, the sale of those would be taxable permanently. On the current wording of section 10b paragraph 3, the donation deduction for such holdings would then be capped at the acquisition cost, and that even after ten years of holding. For legacy holdings acquired up to the end of 2026 the existing legal position is to continue to apply; the cut-off date and its grandfathering are set out in our analysis of the draft.

This is a consequence the draft does not expressly regulate; it emerges only from the interplay with the law on donations. Whether the legislature intends it that way cannot be said today, and the draft is not yet law. Anyone planning a larger donation out of a holding they are only going to build up in future should keep this point in view.

Donating bitcoin: what to take away

Three steps lead from the intention to an evidenced deduction.

1. Establish the acquisition date and purchase price for the specific quantity. That decides whether you may apply the market value or only the acquisition cost. If the purchase is less than a year back and the donation is not urgent, waiting moves the deduction markedly upwards. You get the records from your trading venue's account; which provider releases which history is set out in our overview of regulated crypto exchanges.
2. Clarify the recipient's status and the confirmation in advance. Ask before the transfer whether the organisation has the status under section 5 paragraph 1 number 9 of the Corporation Tax Act and whether it issues a donation receipt for a donation in kind in crypto assets. After the transfer this can hardly be repaired. The valuation on which it bases its confirmation you supply yourself; the evidence for it is produced by the programmes in our comparison of crypto tax tools.
3. Document the transfer. Transaction ID, time, quantity and market value on the day of the transfer belong together in your files. Anyone sending from their own wallet is solely responsible for that; which programmes record addresses and histories permanently is shown by our software wallet comparison.

A closing note that goes beyond tax: none of these steps is a reason to forgo or postpone a donation when the help is needed now. The holding period determines the size of the deduction, not the worth of the donation.

(As of October 1, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)