Gifting Bitcoin: Structuring Crypto Transfers Securely and Tax-Efficiently

Why give crypto assets away during your lifetime?

Lifetime transfers are among the most effective instruments of succession planning in Germany. The gift-tax allowances of sec. 16 of the Inheritance and Gift Tax Act (ErbStG) are renewed every ten years (sec. 14 ErbStG): EUR 500,000 for spouses, EUR 400,000 per child and parent, EUR 200,000 per grandchild. Those who start early can pass on substantial wealth free of gift tax – and remove future appreciation from their own estate.

With Bitcoin there is an additional aspect: if the donor expects prices to rise long-term, an early transfer means the lower current value is used for gift-tax purposes, while later appreciation accrues in the recipient's hands.

Form: when does a gift need a notary?

A promise to make a gift requires notarisation under German law (sec. 518 (1) BGB). Although the defect of form is cured once the gift is executed (sec. 518 (2) BGB), a bare wallet-to-wallet transfer leaves the central questions open: what was transferred, when, and at what value? Do claw-back rights apply? Who bears the tax? The notarial deed answers these questions with lasting evidentiary force.

Key elements of a notarial gift agreement

Reserved right of realisation

To protect the donor's economic interests, the deed can reserve the donor's right to dispose of the gifted assets, including accrued appreciation – for instance if the funds are needed in old age.

Contractual claw-back rights

Typical triggers are the recipient's insolvency, divorce, predecease, or a disposal without consent. Without such clauses, only the narrow statutory grounds remain (gross ingratitude, sec. 530 BGB; impoverishment of the donor, sec. 528 BGB).

Set-off against inheritance claims

The deed determines whether the gift is credited against the compulsory portion (sec. 2315 BGB) or subject to hotchpot among descendants (sec. 2050 BGB), keeping the gift aligned with the overall estate plan.

Tax treatment

For gift tax, the crypto holdings are valued at fair market value at execution of the gift (sec. 12 ErbStG, sec. 9 BewG). For income tax, a gratuitous transfer is not a disposal within sec. 23 of the Income Tax Act (EStG); the recipient steps into the donor's acquisition (sec. 23 (1) sent. 3 EStG), so the one-year holding period continues to run. A sale by the recipient after the holding period is, under current law, free of income tax (cf. Federal Fiscal Court, judgment of 14 Feb 2023 – IX R 3/22; Federal Ministry of Finance circular of 6 March 2025 on crypto assets).

The notary reports the notarised gift to the tax office (sec. 34 ErbStG); the parties' own duty to notify lapses (sec. 30 (3) ErbStG). This creates clarity with the tax authorities from the outset – particularly valuable for crypto assets, whose transfer is otherwise hard to evidence.

Practical execution

Alongside the deed, the technical settlement needs planning: transfer to the recipient's own wallet, documentation of the transaction ID, valuation evidence (price of a recognised exchange on the reference date), and – for minors – questions of legal representation and possible supplementary curatorship.

Chain gifting: using allowances more than once

If grandparents wish to transfer substantial crypto assets to their grandchildren, the direct gift is limited by the comparatively low allowance (EUR 200,000 per grandchild). In a chain gift, the grandparent first gives to their own child (allowance EUR 400,000) and the child then gives to the grandchild (again EUR 400,000). This is permissible provided the first recipient retains a genuine, free decision about passing the gift on – an obligation to pass it on that is binding from the outset is treated by the tax authorities as an abuse of structuring (sec. 42 AO). Notarial structuring ensures a clean separation of the two gifts in time and content.

Minor recipients and supplementary curatorship

Where children are the recipients, they are generally represented by their parents when accepting the gift. However, if the contract contains burdens or counter-obligations (such as claw-back rights or a usufruct), a conflict of interest may exist requiring the appointment of a supplementary curator and, where applicable, family-court approval. For a purely legally advantageous gift this is unnecessary. We clarify this before notarisation so the transfer is effective and secure against challenge.

Usufruct instead of full transfer

As an alternative or complement to the reserved right of realisation, a usufruct can be reserved: the donor transfers the substance but retains the income or a right of use. For non-yielding crypto assets the classic usufruct is less practical than for real estate; graduated reservations of disposal and consent may be considered instead. Which structure fits depends on your goals – protecting the donor, tax optimisation and flexibility must be weighed against each other.