How are liquidity pools taxed in Germany?
In short
Germany has no explicit rule for liquidity pools: the finance ministry's letter of 6 March 2025 doesn't name them, and we know of no court decision on them. TaxMaxi calculates a deposit as a swap of your tokens for your position and a withdrawal as a swap back, each a disposal under § 23 of the Income Tax Act (EStG) (paragraph 54). A gain on it is taxable if you held the tokens for no more than a year. Fees you collect are income from other services under § 22 Nr. 3 EStG.
This reading is disputed. According to a specialist article from IWW, the tax offices are said to take the opposite view for now: depositing and withdrawing aren't disposals. The article doesn't say exactly which instruction this rests on, and we don't know of a published version. Both readings are set out side by side below.
- As of:
- Based on:
- § 22 EStG, § 23 EStG, BMF letter of 6 March 2025
What is a liquidity pool?
A liquidity pool holds two tokens, say SOL and USDC, that other people swap against. If you put tokens in, you provide that liquidity and earn from the fees on the swaps; this is also called liquidity mining. On the blockchain, your tokens leave your wallet and sit in the pool's contract. In return you get a position: an LP token, as on Uniswap v2 or in Raydium's AMM, or an NFT for a price range, as on Uniswap v3 or in Raydium's CLMM. Every swap shifts the mix in the pool, so when you withdraw you usually get back different amounts from the ones you put in.
The BMF letter doesn't mention liquidity pools. The answer comes from its general passages on swaps (paragraphs 53 and 54) and on the value at that moment (paragraphs 58 and 59). Two readings follow from them:
- Deposit as a swapTaxMaxi and some tax advisors
- Your tokens count as disposed of at their market value, and that value is the cost of the position. Within a year of buying, a gain counts right away. When you withdraw, you swap the position back, and a new one-year period starts for the tokens that come out.
- No disposalaccording to IWW, the tax offices for now
- Liquidity mining is a special form of lending, and economic ownership (wirtschaftliches Eigentum) stays with you. Depositing and withdrawing trigger no tax, and your tokens keep their purchase date. Trading the position's tokens, on the other hand, is a disposal. Others put it this way: the position is a mere receipt, the deposit a loan.
TaxMaxi calculates with the swap because you get something other than what you give, and not the same tokens back. It's the cautious reading when you're in profit: the gain counts right away, and the one-year period starts again. That doesn't hold at a loss, because only the swap reading gives you a loss to count at that point. If a court decides, or the tax authorities publish something on this, TaxMaxi will follow it.
An example in euros
Take SOL and USDC; other tokens work the same way. You buy both in January 2025, put them into a pool in February and collect fees in June. In August you withdraw half, and in March 2026 the rest. The euro values are assumed. This is how TaxMaxi calculates under the swap reading; under the other one, depositing and withdrawing wouldn't be disposals:
- 10 January 2025Bought 1 SOL for €150.00
- 10 January 2025Bought 150 USDC for €140.00
- 1 February 2025Into the position: 1 SOL, worth €180.00
- 1 February 2025Into the position: 150 USDC, worth €145.00
- 1 February 2025Position received, cost €325.00
- 1 June 2025Position fees: 10 USDC, worth €9.00
- 1 August 2025Position swapped back for €150.00
- 1 August 2025Out of the position: 0.4 SOL, worth €60.00
- 1 August 2025Out of the position: 100 USDC, worth €90.00
- 1 March 2026Position swapped back for €200.00
- 1 March 2026Out of the position: 0.5 SOL, worth €95.00
- 1 March 2026Out of the position: 110 USDC, worth €105.00
- Proceeds its value on this day
- €180.00
- Cost basis 1 SOL from 10 January 2025
- − €150.00
- Gain after 22 days, taxable
- +€30.00
Swap into the position on 1 February 2025: SOL
- Proceeds its value on this day
- €145.00
- Cost basis 150 USDC from 10 January 2025
- − €140.00
- Gain after 22 days, taxable
- +€5.00
Swap into the position on 1 February 2025: USDC
- Position fees 10 USDC on 1 June 2025
- €9.00
- Income 2025 under the exemption limit of €256
- €9.00
Income 2025
- Proceeds value of the tokens that come out
- €150.00
- Cost basis the position from 1 February 2025
- − €162.50
- Loss after 181 days, counts for tax
- −€12.50
Swap out of the position on 1 August 2025
- Proceeds value of the tokens that come out
- €200.00
- Cost basis the position from 1 February 2025
- − €162.50
- Gain after 393 days, tax-free
- +€37.50
Swap out of the position on 1 March 2026
The income of 2025 stays under the exemption limit of €256: if, together with interest, 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. The swaps of 2025 add up to +€22.50, the loss on swapping back set against the gains on depositing. That is under the exemption limit of €1,000 for private sales: if it's your only gain in the year, you pay no tax on it.
Worked out by TaxMaxi's tax engine, on the same principles as for your wallet.
Liquidity pools on your chain
What a position looks like on a chain, and which pools TaxMaxi reads there, is on the protocol's page, with a real transaction from a public wallet.
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SolanaBlockchain
How are Raydium swaps taxed in Germany?
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EthereumBlockchain
How are Uniswap swaps taxed in Germany?
How is PancakeSwap taxed in Germany?
More topics: Bridges, Lending, Staking. All topics at a glance: DeFi taxes in Germany.
The legal basis
How Liquidity Pools is taxed is set by the Income Tax Act (§ 22 EStG and § 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. It applies the same on every chain.
The letter is divided into numbered paragraphs (Randnummern). Each principle below says where to find it; a click opens the letter at that spot.
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1
Liquidity in a pool
When you put tokens into a liquidity pool, we treat that as a swap for your position: they count as disposed of at their market value, and that value is the position's cost basis. When you withdraw liquidity, we treat that as a swap back: the position's share, what was paid in first going first, counts as disposed of at the market value of the tokens that come back, and you acquire those tokens anew, with a new holding period. That's also where impermanent loss shows up. The finance ministry's letter says nothing about liquidity pools. Even whether paying in is a disposal at all is disputed, and with it the new holding period: the other reading sees the position as a mere receipt and the deposit as a loan. We take the cautious reading.
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2
Fees from a pool
Fees and rewards that a position in a liquidity pool pays you 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 position had earned by the end of the year but not yet paid out can't be looked up for past years, so it counts when you collect it.
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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
- 5
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6
The exemption limit (Freigrenze)
If the sum of all your gains from private sales in the year stays under €1,000 (up to 2023: €600), it's tax-free. Above that, all of it is taxable, not only the part over the limit.
See the BMF letter, paragraph 53
Common questions
Is depositing into a liquidity pool taxable?
That isn't settled. Under the swap reading, which TaxMaxi calculates with, it's a disposal: a gain counts if you held the tokens for no more than a year, and stays tax-free if all such gains in the year together are under €1,000 (paragraph 53). Under the other reading, depositing isn't a disposal and no tax arises.
What does the BMF letter say about liquidity pools?
Nothing explicit. The word doesn't appear in the letter of 6 March 2025. It briefly describes decentralized exchanges, including that users provide crypto assets there for swapping, "Peer-to-Pool", but it doesn't say how that is taxed (paragraph 20a). That leaves the general passages on swaps (paragraph 54) and on lending (paragraph 26), and which one you put the pool under gives you one reading or the other.
Does the holding period restart when I withdraw liquidity?
Under the swap reading, yes: the tokens that come out are newly acquired, and their year starts that day. Under the other reading, the period keeps running from the purchase, even while the tokens sit in the pool. TaxMaxi calculates with the restart. For tokens you acquire from 2027, a draft from the finance ministry would drop the holding period: What's set to change from 2027.
How are fees from a pool taxed?
TaxMaxi calculates them as income under § 22 Nr. 3 EStG, at their market value on the day you collect them, the way the BMF letter treats staking and lending (paragraphs 48 and 65). If your income of this kind stays under €256 for the year, you pay no tax on it (paragraph 45). According to IWW, the second reading also arrives at § 22 Nr. 3. Some tax advisors, however, put the fees under § 20 Abs. 1 Nr. 4 EStG, which means the flat rate of 25%.
Doesn't the flat tax on capital income (Abgeltungsteuer) apply to pool fees?
That hasn't been decided for pools. For Bitcoin lending, the Cologne Finance Court (Finanzgericht Köln) confirmed § 22 Nr. 3 EStG in September 2025 and rejected § 20 Abs. 1 Nr. 7 EStG: Bitcoin, it said, isn't a claim to money. The judgment doesn't mention pools, and it isn't final: the appeal is pending at the Federal Fiscal Court (Bundesfinanzhof). TaxMaxi stays with § 22 Nr. 3, but will adjust the calculation if the Federal Fiscal Court decides otherwise.
How does impermanent loss affect tax?
While the position is open, not at all: it isn't an event of its own. It only shows up when you withdraw, in what comes back. Under the swap reading, the result is the value of the tokens that come out minus the cost of the position, price movement and impermanent loss in one number. If you deposited no more than a year ago, a loss from this counts for tax; after that it no longer does.
Do fees I haven't collected yet count?
TaxMaxi counts them when you collect them. What a position had earned by the end of a year but not yet paid out can't be read from the blockchain for past years. For staking, the BMF letter counts what hasn't been collected at the end of the year at the latest (paragraph 48a); whether the same goes for pools, it doesn't say.
What if I sell the LP token or stake it in a farm?
If you sell or swap the LP token itself, that's a disposal under both readings. If you stake it in a farm, nothing is disposed of: the position keeps its date and cost. Farm rewards are income under § 22 Nr. 3 EStG when you collect them; there's an example on the page about PancakeSwap.
Which reading applies to my tax return?
That's your decision, if in doubt with a tax advisor. TaxMaxi calculates under the swap reading and says in the report that it's disputed. You can't currently choose the other one in TaxMaxi.
Sources
- § 22 EStG
Other income: fees from pools and the €256 limit in Nr. 3
- § 23 EStG
Private sales: the one-year period and the €1,000 limit
- The finance ministry's letter of 6 March 2025
How the tax offices tax crypto assets, as a PDF from the finance ministry
- Cologne Finance Court, 3 K 194/23
The judgment of 10 September 2025 on income from Bitcoin lending, not final
- Steuerliche Behandlung des Liquidity Mining
Specialist article at IWW of 14 July 2026, the other reading
- Ertragsteuerliche Behandlung bestimmter Kryptowerte
Specialist article at IWW of 7 April 2026, on economic ownership
- Uniswap documentation
How liquidity in a price range works
- Orca documentation
How pools and positions work on Solana
This page explains how TaxMaxi calculates. It is not tax advice and does not replace a tax advisor.