PMPA vs FIFO: Understanding Crypto Tax Calculation Methods
France uses PMPA, Germany uses FIFO. Learn how each method works, how they affect your tax bill and why choosing the right one matters for accurate crypto tax reporting.
Written by Elena Marchetti
Tax specialist in digital assets
The PMPA method explained
PMPA, or Prix Moyen Pondure d'Acquisition, translates to Weighted Average Acquisition Cost. It is the mandatory method in France under Article 150 VH bis of the tax code. Instead of tracking individual lots, PMPA calculates the average purchase price of your entire portfolio. When you sell, the taxable gain equals the sale proceeds minus the PMPA multiplied by the fraction of the total portfolio sold. This method smooths out price fluctuations and is relatively straightforward once understood.
The FIFO method explained
FIFO, or First-In-First-Out, is the standard method in Germany, Austria and several other European countries. Under FIFO, the first coins you bought are considered the first coins you sell. The gain is calculated as the difference between your sale price and the purchase price of the earliest acquired lot. In Germany, FIFO also interacts with a one-year holding exemption: if you hold an asset for more than one year, the gain on that lot is tax-free.
PMPA vs FIFO: key differences and impact
The two methods can produce significantly different tax results for the same set of transactions. PMPA averages your cost basis across the entire portfolio, which tends to smooth gains. FIFO assigns specific cost bases from oldest lots, which can produce larger or smaller gains depending on price history. In rising markets, FIFO often results in higher taxable gains because your earliest purchases had the lowest cost. In volatile markets, PMPA can sometimes produce higher gains because the average cost lags behind recent prices.
Automatic method detection with Taxes Crypto
You do not need to manually choose or calculate using PMPA or FIFO. Taxes Crypto automatically detects your tax residence country and applies the legally required method. French users get PMPA. German and Austrian users get FIFO with holding-period recognition. Dutch users get Box 3 wealth calculation. Everything is handled at 8-decimal precision so your declared amounts are accurate to the smallest fraction of a coin.
LIFO, HIFO and other alternative methods
Beyond PMPA and FIFO, some countries accept other methods. LIFO (Last In, First Out) sells the most recently purchased units first, which is advantageous in a bull market as recent costs are higher. HIFO (Highest In, First Out) uses the highest cost units first, optimal for minimizing capital gains. In the Netherlands, the Box 3 system taxes wealth value on January 1, making these methods irrelevant.
Method impact on your tax bill
The difference can be considerable. Imagine 3 purchases of 1 ETH: at 1,000 EUR, 2,000 EUR, and 3,000 EUR. You sell 1 ETH at 2,500 EUR. With FIFO, the capital gain is 2,500 - 1,000 = 1,500 EUR. With LIFO, it's 2,500 - 3,000 = -500 EUR (a loss). With PMPA, it's 2,500 - 2,000 (average) = 500 EUR. On an active portfolio with hundreds of transactions, these differences multiply considerably.
Can you change methods midway?
As a general rule, no. Once you've chosen (or your country mandates) a method, you must keep it. In France, PMPA is mandatory with no choice. In Germany, FIFO is the norm accepted by tax authorities. If you've used the wrong method in previous years, it's recommended to consult a tax advisor to evaluate rectification options.
How Taxes Crypto handles methods automatically
During registration, you indicate your country of tax residence. Taxes Crypto then automatically applies the official method: PMPA for France, FIFO for Germany, specific identification for Italy (since 2023 finance law), Box 3 wealth value for the Netherlands. No manual configuration needed.
Official legal sources
This article is provided for informational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified professional for your personal situation.
Elena Marchetti
Tax specialist in digital assets
Elena Marchetti is a European tax specialist focused on cryptocurrency taxation. Holding a Master's in Finance and certified as a tax advisor, she has been guiding crypto investors since 2018 through their tax obligations across Europe.
Crypto taxation · European regulation · DAC8 · MiCA
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