Understanding airdrops - types, benefits and tax aspects

Tax treatment of airdrops in Germany

The tax treatment of airdrops in Germany depends on various factors and can be complex. Here are some basic guidelines:

Income tax

• Taxation on receipt:
  Airdrops that are received without consideration and without personal capital expenditure can be treated as other income in accordance with Section 22 No. 3 EStG. The value of the tokens received on the day of receipt is taxable.
• Valuation:
  The value of the airdrop is converted into euros at the time of receipt and recognized as revenue.
• Holding period:
  If a token received in an airdrop is later sold, the holding period (one-year period) may play a role. If the tokens are held for longer than one year, the capital gains may be tax-free.

Trade tax

• Commercial activity:
  If airdrops are received as part of a commercial activity (e.g. regular trading in cryptocurrencies), the income is subject to trade tax.

Value added tax

• No sales tax:
  The receipt of airdrops is generally not considered a service in return for payment, so no sales tax is incurred.

Documentation and obligation to provide evidence

In Germany, it is important to document all transactions and the receipt of airdrops precisely. The burden of proof lies with the taxpayer. It is advisable to record the following information:

• Date of receipt
• Value of the token at the time of receipt
• Proof of fulfillment of conditions (if required)
• Transaction details and wallet addresses

Summary

Airdrops are a popular method of distributing cryptocurrency tokens to a broad user base and publicizing a new project. There are different types of airdrops, which have different requirements and objectives. In Germany, airdrops are generally subject to income tax and must be carefully documented.

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