How Staking Rewards, Airdrops and DeFi Lending Are Taxed: Germany and the UK, Read From the Primary Sources

Buying and selling crypto is the part of the tax law that most guides cover. Staking rewards, airdrops and DeFi lending are where people get stuck, because the rewards arrive as new tokens, sometimes daily, and tax authorities treat them differently from a sale. This guide sets out how two jurisdictions treat these receipts according to their own official texts: the German Federal Ministry of Finance letter of 6 March 2025, and HMRC's Cryptoassets Manual in the UK. It also says plainly where we could not verify a third country, Spain, from a primary source.

The short version

Germany: what the finance ministry's letter says

The letter of 6 March 2025, titled "Questions regarding the income tax treatment of specific crypto-assets", updates the ministry's earlier letter of 10 May 2022. The English text on the ministry's site is a courtesy translation and "not binding"; the German version should be consulted for legal guidance. Paragraph numbers below refer to that text.

What counts as "staking"

Paragraph 13 explains that, in proof of stake, users often provide crypto-assets as a stake without being involved in block creation themselves, usually by taking part in a staking pool, or via a centralized exchange ("platform staking"). The letter uses "(passive) staking" for providing a stake without block creation. This is the situation of most retail users, and it is what the rules below address. Running a validator yourself, which means block creation, is treated separately (paragraphs 33 to 47) and is outside this guide.

Staking rewards: other income, valued when acquired

According to paragraph 48, income from passive staking is "generally subject to taxation under section 22 no 3 of the Income Tax Act". The reasoning given is that taxpayers receive additional crypto-assets as consideration for a service, namely "temporarily forgoing the use of the crypto-assets". The assets received are valued at the market price at the time of acquisition.

Paragraph 48a gives a simplification that matters in practice: for reasons of simplicity, it is admissible, in the course of a year, to assume that the time of receipt is the time of deposit in the wallet, which the letter calls "claiming" (see paragraph 13). Rewards not yet claimed "must be taken into account at the end of the fiscal year/calendar year at the latest". If the staked assets are business assets, the consideration is business income and recognized at market price at receipt (paragraph 49).

The EUR 256 threshold

Paragraph 45 states the limit in the context of block creation income, which "is not subject to income tax if, together with other income from rendering of service, it amounts to less than EUR 256 per calendar year", citing section 22 no 3 sentence 2 of the Income Tax Act. Because passive staking income is classified under the same provision (paragraph 48), we read the same statutory limit as applying to it. Three points follow from the wording. It is a combined amount across all service income of that type, not per token or per platform. It is stated as "less than" a figure, which in German tax terms is an exemption limit (Freigrenze): the letter does not describe a deduction of the first EUR 256, so a total at or above the figure should be treated as taxable in full. And it applies to private (non-business) holders.

After the reward: the holding period for a later sale

Once rewards are received, they are treated as acquired. Paragraph 54 lists tokens "obtained by lending or (passive) staking" among those treated as purchased for valuable consideration. Under paragraph 53, profits from selling crypto held as private assets are taxable as private sales transactions if the time between acquisition and sale is no more than one year, and tax-free if total gains from all private sales in the calendar year are less than EUR 1,000 (EUR 600 before the 2023 assessment period). Paragraph 55 adds that the holding period restarts on each exchange, and paragraph 54 that exchanging one crypto-asset for another counts as a sale.

The practical consequence is that every staking reward starts its own one-year clock. Paragraph 63 states that the extension of the holding period to ten years does not apply to currency or payment tokens. We read that as meaning that staking or lending does not, by itself, extend the one-year period for those tokens, but the paragraph deals with currency and payment tokens specifically, so tokens of other types should be checked individually.

Lending

Paragraph 65 says income from lending crypto-assets is taxable under section 22 no 3, because the taxpayer renders a service; the assets received for lending are valued at market price at receipt, with the same "claiming" simplification as for staking. For sale of those tokens, the letter refers back to paragraphs 53 and following.

Airdrops

The letter distinguishes several situations:

• Airdrop for a service (paragraphs 70 to 71). Receipt is service income "if interested parties are required to render a service", in particular active engagement such as mentioning the airdrop or its initiator in social media posts. Handing over data beyond what the transaction needs also counts, and the letter assumes this where taxpayers must make personal data available. It notes that, for an airdrop, the public key normally suffices, so a request for more personal data goes beyond what the allocation needs.
• Airdrops partly decided by chance (paragraph 72). Where the receipt is partly decided by chance, the necessary link between service and consideration falls away, so the service-income analysis does not apply in the same way.
• Valuation (paragraph 73). Market price at the time; where no market price can yet be determined, the letter allows valuing the airdropped tokens at EUR 0.
• No service at all (paragraph 74). If there is no economic connection between the allocation and any service, it "may constitute a gift", for which the tax rules on gifts apply.
• Later sale (paragraph 75). If tokens were allocated in return for a service, they are deemed acquired, and a later sale can be a private sale transaction.

Valuation and records

The letter allows daily prices (average, time-of-day or closing price) as the tax base, provided values are determined consistently from documented sources, and says values are not consistent if, for example, acquisition cost and sales prices come from different sources or times (paragraph 91). It describes how tax reports from software can serve as a basis for assessment if they are complete, consistent and plausible, and says taxpayers must regularly provide the settings behind the report (paragraph 90). Our German-language ELSTER guide and the general crypto tax return guide cover the filing side.

What the letter does not cover

In the English translation we read, we found no provision on liquidity pools or liquidity mining. The letter is described as updated continuously with the state tax authorities, so check for newer versions. If you use DeFi protocols beyond simple staking and lending, the German treatment is not settled by this letter on its face.

United Kingdom: what HMRC's manual says

HMRC's Cryptoassets Manual is guidance, not legislation, but it sets out how HMRC applies the law. The pages below are on GOV.UK.

Staking (CRYPTO21200)

Whether staking is a taxable trade "depends on a range of factors such as degree of activity, organisation, risk and commerciality". If it is not a trade, "the pound sterling value (at the time of receipt) of any tokens awarded will be taxable as income (miscellaneous income) with any appropriate expenses reducing the amount chargeable". If you keep the awarded assets, "they may have to pay Capital Gains Tax when they later dispose of them". So, like the German treatment, there are two steps: income at receipt, and a later gain or loss when you dispose of the tokens.

Airdrops (CRYPTO21250)

The manual defines an airdrop as an allocation of tokens, for example as part of a marketing campaign, including tokens provided because you hold other tokens or because you registered for it. It then says that "Income Tax will not always apply to airdropped tokens received in a personal capacity", and that it may not apply if they are received without doing anything in return (not related to any service or other conditions) and not as part of a trade or business involving cryptoasset exchange tokens or mining. Airdrops provided "in return for, or in expectation of, a service" are subject to Income Tax as miscellaneous income or as trade receipts. A later disposal may give a chargeable gain for Capital Gains Tax "even if it's not chargeable to Income Tax when it's received".

DeFi lending and staking (CRYPTO61000 and following)

HMRC has a dedicated section for decentralised finance. Three points matter for most readers.

• Definitions (CRYPTO61120). The manual notes that "there's no statutory or legal meaning of the terms 'lending' and 'staking'" in this context. The guidance applies to two types of transaction: a person transferring control of tokens to a borrower with a right to equivalent tokens back later, and a "liquidity provider" transferring tokens to a DeFi lending platform that transfers other tokens back to them.
• The return and the principal (CRYPTO61213). The miscellaneous income provisions "will only subject the return ... and not the repayment of the principal to Income Tax. The repayment of the principal will be a capital transaction." The return is a non-cash receipt, and the amount charged is "the pound sterling value of the tokens received by the lender". The trading and miscellaneous income allowance may apply.
• It depends on the terms (CRYPTO61130). The manual says there is "no single operating model for DeFi lending platforms", so "it will be necessary to consider the terms and conditions offered by the DeFi lending platform to understand the tax consequences". The activity may amount to a trade, and where it does not, "there may instead be a disposal for chargeable gains purposes". The manual gives examples of models, including platforms that give the provider receipt tokens (for example, one that issues a token back in exchange for the deposit), and tokens or NFTs representing a share of a pool.

The last point is the one most likely to catch ordinary users: moving tokens into a lending or staking platform can itself be a disposal in some structures, even before any reward arrives. HMRC's pages on chargeable gains (CRYPTO61620) deal with that, and we did not review them in full. For the general capital gains rules, see our UK crypto capital gains guide.

Two worked examples (illustrative figures, simplified)

These examples apply the rules we described to made-up numbers, to show the mechanics. They are not advice, ignore other income and personal circumstances, and use round figures.

Example 1: staking rewards for a private holder in Germany

A private holder stakes through an exchange's staking service. Over a year the exchange credits rewards on 40 different days. Following paragraph 48, each reward is valued at its market price when acquired, and paragraph 48a allows the holder to use the date it is credited to the wallet as the time of receipt. Suppose the euro values add up to EUR 180 for the year and the holder has no other service income. That total is below the EUR 256 limit, so in the reading we described it is not taxed as income. Suppose instead the total is EUR 400. It is then above the limit, and, because the limit works as an exemption limit and not an allowance, the whole EUR 400 should be treated as taxable "other income", not only the EUR 144 above the limit.

Separately, each of the 40 rewards started its own one-year holding period on the date it was received. If the holder sells a reward token after five months at a gain, that gain is a private sale within the one-year period and counts toward the EUR 1,000 annual limit for private sales (paragraph 53). If the holder keeps a reward token for more than a year, a later sale is outside the one-year rule, as paragraph 53 sets out. The valuation at receipt is also the starting acquisition cost for that later calculation, in the way paragraph 75 describes for airdrops.

Example 2: a DeFi lending return in the UK

An individual deposits 10 ETH in a lending protocol and, a few months later, withdraws 10.2 ETH, the extra 0.2 ETH being the return. Under CRYPTO61213 the return, not the principal, is what the miscellaneous income provisions can charge, and the amount is the pound sterling value of the tokens received. If 0.2 ETH was worth GBP 500 at the time the return was received, that GBP 500 is the starting point for the income calculation, subject to any allowance that may apply. The repayment of the 10 ETH principal is "a capital transaction", and HMRC's manual indicates that whether the original deposit itself was a disposal depends on the platform's structure. If the protocol had issued a receipt token in exchange for the deposit, the analysis of that exchange would form part of the capital gains position. This is the kind of case where the platform's terms decide the outcome, as CRYPTO61130 says, and where the specific pages on chargeable gains matter.

Spain: what we could not verify

The brief for this guide included Spain. We could not read a primary Spanish source: the General Directorate of Taxes (DGT) publishes binding rulings in a search database that our tools could not load. Law-firm summaries say that binding ruling V1766-22 treats staking rewards under personal income tax, and distinguishes between a person acting as a validator and a person staking as an investment, classing the latter's returns as income from movable capital. We report that only as second-hand and do not give rates, thresholds or treatment for airdrops or DeFi. If you are tax resident in Spain, check the DGT database (consultas vinculantes) and the tax agency's own guidance, and use an adviser.

Practical steps for any of these systems

1. Keep a ledger of every reward. Record date and time, token, quantity, platform or protocol, wallet address and transaction hash, and the fiat value at the time. Both the German and UK treatments are anchored to the value at receipt.
2. Use one price source consistently. The German letter says inconsistency between sources or times can make a valuation unreliable (paragraph 91). The principle is sensible anywhere.
3. Treat each reward as its own acquisition. In Germany each reward starts a new holding period; in the UK, each disposal feeds a capital gains calculation using the value at receipt as a starting point.
4. Do not assume a swap is tax-neutral. The German letter treats an exchange of one crypto-asset for another as a sale (paragraph 54), and HMRC's DeFi section treats some deposits as disposals.
5. Check your platform's reports, then check them against the rules. Tax-reporting software and exchange statements follow their own assumptions. The German letter says reports must be plausible, complete and consistent, and that you may need to show the settings (paragraph 90).
6. Expect more reporting. Platforms are being required to report user data to tax authorities under new rules, which we cover in our DAC8 guide, and the UK has its own crypto-asset reporting rules, covered in our HMRC CARF article. Whatever you declare should be consistent with what a platform may report about you.
7. Get advice for DeFi. Liquidity pools, wrapped or receipt tokens and rebasing tokens raise questions that neither of the texts we read settles in a simple rule.

What we could not verify

• Spain, as explained above.
• Italy, France, the Netherlands and other countries. This guide covers two jurisdictions only. The site's other tax pages cover filing and reporting in several countries.
• Whether the German original differs from the English courtesy translation in any detail. The translation says the German version governs.
• The HMRC pages on chargeable gains for DeFi (CRYPTO61600 and following), and the figure of the trading and miscellaneous income allowance, which we did not read.
• Changes since the dates of the documents we read: the German letter is dated 6 March 2025, and the HMRC pages are as published when we read them on 1 November 2026.

Frequently asked questions