How is lending on Aave taxed in Germany?

What is Aave?

Aave is a lending protocol on Ethereum and many other chains, among them Base, Arbitrum, Optimism, Polygon and BNB Chain. You lend tokens like ETH, USDC or WBTC into a pool, and others borrow from that pool against collateral. The interest they pay is yours. What you've lent can also be the collateral for a loan of your own at the same time.

For your deposit you get an aToken, for example aEthWETH for WETH. Its balance grows by the interest with every block, without a transfer ever showing up in your wallet. When you withdraw, you hand the aToken back and get the tokens plus the interest.

1. The app app.aave.com You pick what you want to lend or borrow and confirm in your wallet.
2. The pool 0x8787…a4e2 Aave's pool takes the tokens, keeps track of your position and gives you the aToken for them.
3. The receipt the aToken, such as aEthWETH Your claim on the tokens you lent, which grows with the interest.

For tax, all that counts is what happens to your tokens. Lending isn't selling, interest is income, a loan is an acquisition, and repaying it is a disposal. The same goes on Solana: how lending is taxed in Germany.

An Aave deposit on the blockchain

A real Aave deposit from a public wallet, as TaxMaxi reads it. Next to each item the wallet gives up, you can see what it means for tax.

The wallet lent 1 ETH through Aave's gateway, which wraps the ETH into WETH and puts it in the pool. What came back was aEthWETH, the claim on the same ETH. It isn't a second token, so it has no item of its own.

An example in euros

An example with USDC: 2,500 USDC, bought in June 2024, lent on 5 July 2024 and withdrawn with the interest on 31 December 2025. The euro values are assumed for the example. This is how TaxMaxi works out the interest:

Each year's interest stays under the exemption limit of €256 for income like this. If, together with staking rewards and other income under § 22 Nr. 3 EStG, it's your only income of this kind in the year, you pay no tax on it. From €256 the whole amount is taxable, at your personal tax rate.

Worked out by TaxMaxi's tax engine, on the same principles as for your wallet.

The legal basis

Whether lending costs tax is set in two places in the Income Tax Act (EStG): interest is income from other services under § 22 Nr. 3 EStG, and a sale, a repayment or a liquidation is a private sale under § 23 EStG. How tax offices apply this to crypto is set out in the finance ministry's letter of 6 March 2025, which binds them.

The letter is divided into numbered paragraphs (Randnummern). Each principle below says where to find it; a click opens the letter at that spot.

1. 1

   Lent tokens

   If you lend tokens to a lending protocol, you let it use them and don't dispose of them. They keep their acquisition date and cost basis. The receipt token you get for them is only your claim on those same tokens, not a second token, and what comes back of the lent tokens isn't a new acquisition.

   See the BMF letter, paragraphs 26 and 65

2. 2

   Interest from lending

   Interest from lending is income under § 22 Nr. 3 EStG at its market value when received, and each interest token gets its own acquisition date. If the interest grows only in the price of your receipt token, it counts at the latest at the end of each year, at the price of 31 December, and the rest when you withdraw the tokens.

   See the BMF letter, paragraphs 43, 48a, 54 and 65

3. 3

   The exemption limit (Freigrenze) for income

   Income from other services under § 22 Nr. 3 EStG is tax-free if it stays under €256 in the year.

   See the BMF letter, paragraph 45

4. 4

   One-year holding period

   The year runs from the day of acquisition to the swap, and each swap starts it again for the token you receive. There's no extension to ten years. For tokens you acquire from 2027, a finance ministry draft would drop the holding period: What is set to change from 2027.

   See the BMF letter, paragraphs 55 and 63

5. 5

   Taking out a loan

   Borrowed tokens are yours to use: you can spend them or swap them. When you take out the loan, they're acquired at their market value, with their own acquisition date. They aren't income.

   See the BMF letter, paragraphs 43 and 54

6. 6

   Repaying a loan

   When you repay a loan, you dispose of the repaid tokens at their market value. With a stablecoin loan that gives hardly any gain or loss; with a volatile token there can be one. What you repay beyond the amount you borrowed is the interest: it's disposed of the same way and is a private cost that isn't deducted anywhere.

   See the BMF letter, paragraphs 53, 54 and 58

7. 7

   Liquidation

   If a liquidator takes your collateral because your loan has grown too large, you dispose of it. The proceeds are the value of the debt the liquidator paid off with it, and the liquidator's premium is your loss. If the acquisition was less than a year ago, the gain or loss counts.

   See the BMF letter, paragraphs 53, 54 and 58

8. 8

   Farm rewards

   Rewards a farm pays for your staked tokens are income under § 22 Nr. 3 EStG when you collect them, at their market value on that day, and each one gets its own acquisition date. What the farm still owed you at the end of the year can't be looked up for past years, so it counts when you collect it.

   See the BMF letter, paragraphs 43, 45, 46, 48a and 91

Common questions