Input Tax Deduction for Bitcoin Mining in Germany
Bitcoin mining as a business model
Bitcoin mining is no longer just a technical experiment for IT enthusiasts. More and more companies are recognizing its economic potential and investing in mining hardware, power infrastructure, and maintenance. Operators of renewable energy plants in particular are increasingly concerned about how to deal with falling or, in some cases, negative feed-in tariffs for electricity fed into the grid. In some cases, it may make sense to use the electricity generated for mining activities instead of shutting down the plants.
But what about the tax implications? Above all, is it possible to deduct input tax for mining in Germany?
Input tax deduction for mining services
This question is crucial for many entrepreneurs because the investments are high. ASIC miners, electricity costs and maintenance contracts quickly add up to six-figure sums. This makes it all the more important to clarify whether the VAT paid on these expenses can be claimed as input tax.
Mining: Technical background and remuneration model
Mining involves providing computing power to add new blocks to the Bitcoin blockchain. In return, miners receive so-called “block rewards” and voluntary transaction fees. Remuneration is either direct (solo mining) or via a mining pool (pool mining), in which several miners join forces.
The most common form of remuneration in pool mining is the pay-per-share method (PPS). Here, the miner receives a proportional remuneration according to the computing power they have provided.
VAT classification: Mining rewards are not taxable
According to current administrative opinion in Germany – in particular, according to the BMF letter dated February 27, 2018 – mining is not a taxable activity. The reason for this is that there is no identifiable recipient of services, as required by Section 3 (9) of the German Value Added Tax Act (Umsatzsteuergesetz, UStG) for other taxable services.
Even in pool mining, the service is not directed at the pool operator, but at the decentralized blockchain network. The pool operator merely assumes a coordinating role. The remuneration corresponds technically and economically to that of solo mining. Therefore, in our opinion, the same tax principles apply: mining services are not subject to VAT. In other words, the taxpayer does not have to pay VAT on the Bitcoin (BTC) received.
Input tax deduction: Possible under certain conditions for mining
At the same time, however, we believe that the entrepreneur is still entitled to input tax deduction. Since mining is not taxable, the exclusion of input tax deduction under Section 15 (2) UStG does not apply.
The only prerequisite for input tax deduction is a direct connection between the input and output services. And this connection usually exists in mining: without miner hardware, electricity and maintenance, it would not be possible to provide the computing power. These costs are necessary operating expenses and are directly related to the mining activity.
What about the exchange of Bitcoin?
The subsequent exchange of mined Bitcoins into euros serves only to secure liquidity and does not constitute an independent tax-free service that could exclude input tax deduction – at least not if the entrepreneur holds the mined Bitcoins for the long term and only sells them to the extent necessary to cover the running costs of the business. But even if one wanted to see it differently, in our opinion there was no direct connection between the input service and the output service. This is because the sale of the Bitcoins has nothing to do with the input services. The latter are rather necessary for mining Bitcoin. Only to this extent do we recognize a direct connection. The subsequent sale of the Bitcoins does not require any expensive investments, i.e., no relevant input services.
Tax planning pays off | WINHELLER can help
Bitcoin miners – whether solo or in a pool – can generally claim input tax on their investments. The key factor is that the mining activity is not taxable and there is a direct link between the investments (e.g. hardware, electricity, maintenance) and the mining output.
But beware: the tax classification is currently based solely on the administrative opinion of the Federal Ministry of Finance – a supreme court ruling in Germany is still pending (however, the Federal Finance Court in Austria takes a similar view, albeit with regard to ETH mining, cf. BFG of May 20, 2025, RV/5100186/2024). Anyone planning a comprehensive mining project in Germany should therefore seek tax clarity at an early stage – for example, by obtaining binding information from the tax office. This minimizes risks and allows for better investment planning.
Your advisor for input tax in mining in Germany
Are you planning a mining project and want to be on the safe side when it comes to taxes? Our experts in tax law and cryptocurrencies will be happy to advise you – competently, practically, and individually. Feel free to contact us directly for a non-binding offer!
Frequently asked questions about input tax in mining in Germany
As an entrepreneur, can I claim input tax for mining hardware and electricity costs?
Under certain conditions, yes. Since Bitcoin mining is not subject to VAT, input tax can usually be deducted for necessary input services such as hardware, electricity, and maintenance.
Why is mining not subject to VAT in Germany?
Because there is no clearly identifiable recipient of the service. Instead, the service is provided to the decentralized blockchain network.
Do I have to pay VAT on mining income?
No, according to current administrative opinion, mining rewards (e.g. Bitcoin) are not subject to VAT.
Can the subsequent exchange of mined bitcoins affect input tax deduction eligibility?
No, the exchange for liquidity purposes is not considered an independent service and therefore does not prevent input tax deduction.
