Loss Offsets for Crypto Derivatives and Forward Transactions in Germany

Losses from forward transactions can now be claimed again without restriction in Germany. This was already possible before 2021. From 2021 to 2024, this was no longer possible without further ado due to the newly introduced Section 20 (6) sentence 5 EStG:

1. Losses for this period were only allowed to be offset against gains from forward transactions and income from option writer transactions.
2. In addition, the offsetting of losses was limited to EUR 20,000 per year from 2021. This limit was initially only EUR 10,000, but was increased to EUR 20,000 by the Annual Tax Act 2020 before the regulation came into force.

Losses that were not offset could be carried forward to subsequent years. But even then, the amount of losses that could be offset was limited to EUR 20,000 per year. This effectively led to a minimum taxation of profits. After numerous complaints, this regulation was abolished on January 01, 2025!

A GmbH always generates commercial income, meaning that the restriction on offsetting losses from Section 20 (6) sentence 5 EStG can never apply. Similar restrictions for commercial income (Section 15 (4) sentence 3 EStG) also do not apply to a trading GmbH.

GmbHs that are structured as “finance companies” enjoy even more preferential treatment. This also ensures that they are not subject to supervision by BaFin. Because the boundaries to activities requiring a license are fluid, careful planning is not the only requirement. It is often advisable to coordinate the classification as a financial company with BaFin and obtain a “no action letter”. This is BaFin's confirmation that there is no duty of supervision. On the part of the tax office, it is advisable to obtain a so-called binding information, with which the tax office confirms that a loss restriction does not apply to the trading GmbH.

It should be noted that the term “finance company” within the meaning of the KWG is not necessarily identical to that of tax law. Nevertheless, it may make sense to submit a corresponding letter of confirmation from BaFin to the tax office. Benefit from our expertise as one of the leading law firms in the field of cryptocurrency taxation and BaFin licence procedures and save taxes with your own trading GmbH.

Our experts will gladly help you set up your own trading limited liability company. Founding such a company is carried out in 5 partly parallel steps:

1. The actual founding of a GmbH and, if necessary, legal structuring as a financial company, i.e.:

   • Drafting of a suitable limited liability company agreement

   • Drafting of a list of shareholders

   • Coordination of the desired company name with the Chamber of Industry and Commerce (IHK)

   • Forwarding the required documents to a notary you trust or to a notary's office in cooperation with us and the coordination of an appointment for you with a notary for the company founding

   • If necessary, (telephone) support for the notary appointment

2. Examination of the factual and legal situation with regard to the classification of your trading GmbH as a financial company in accordance with Section 1 Para. 3 of the German Banking Act (Kreditwesengesetz, KWG)

3. Contacting BaFin and drafting a letter to BaFin based on the results of the audit for the purpose of confirming that there is no supervision obligation

4. Drafting of an application for binding information to the relevant tax office with the aim of confirming that the trading GmbH is not subject to any restriction of loss—if necessary, submitting the no action letter from BaFin

5. Drawing up the necessary managerial service agreement, i.e.

   • Preliminary discussion (usually by telephone) to clarify your ideas regarding the drafting of the contract, incl. advice on typical tax and social security challenges

   • Drafting of an individual managerial service agreement

   • Review and, if necessary, revision of the draft contract