Crypto tax in Germany: holding period and exemption limit

This article describes the law in Germany and nothing else. If you are taxed in another country, different rules apply to the same transactions, and this text does not cover them. In German income tax law, buying and selling crypto-assets privately lands in an old drawer: a private disposal under section 23 (1) sentence 1 no. 2 of the German Income Tax Act (Einkommensteuergesetz), the same provision that covers gold or collectors' items. Two figures follow from it, and everything turns on them: a holding period of one year and an exemption limit of 1,000 euro per calendar year.

What the law says and what the Federal Fiscal Court decided

Section 23 (1) sentence 1 no. 2 of the German Income Tax Act covers disposals of other assets where no more than one year lies between acquisition and disposal. The German Federal Fiscal Court (Bundesfinanzhof) held in its judgment of 14 February 2023, case IX R 3/22, that virtual currencies in the form of currency tokens belong to those other assets. They are acquired when obtained in exchange for euro, for a foreign currency or for other virtual currencies, and disposed of when exchanged back or swapped into other currency tokens.

The tax administration took over that line in the circular of the German Federal Ministry of Finance (Bundesministerium der Finanzen) of 6 March 2025, which restates the earlier circular of 10 May 2022 over 34 pages. Margin number 53 calls crypto-assets other assets within the meaning of section 23 and cites the judgment. So anyone who holds for more than a year pays no income tax on the gain. Anyone who sells, swaps or pays within the period has a taxable event.

Neither section 23 nor the circular says on which day the period ends. That follows only from the general rules on time limits: section 108 (1) of the German Fiscal Code (Abgabenordnung) declares sections 187 to 193 of the German Civil Code (Bürgerliches Gesetzbuch) to apply accordingly. Under section 187 (1) of the Civil Code the day of acquisition does not count, and under section 188 (2) a one year period ends at the close of the day that corresponds by its number to the day of acquisition. From a purchase on 10 March 2026 it follows that a sale on 10 March 2027 still falls inside the period and is taxable, while from 11 March 2027 it falls outside. That is a conclusion drawn from three provisions, not a literal quotation, and in a dispute it should be checked.

This treatment under section 23 applies to currency or payment tokens, that is Bitcoin, Ether and comparable units; case IX R 3/22 concerned exactly that group, and margin number 3 of the circular classifies them that way. For the other two groups margin number 53 refers to margin numbers 77 onwards. With utility tokens, redeeming the token for the promised good or service is irrelevant for income tax under margin number 79; where acquired utility tokens are sold, margin number 80 can bring section 23 back into play. Security tokens count as securities or other financial instruments under margin number 81, depending on how they are structured, so running income and disposal gains run through section 20 of the Income Tax Act under margin number 82, that is income from capital assets, where the one year period of section 23 plays no part. Everything else in this text concerns currency and payment tokens.

The 1,000 euro is an exemption limit, not an allowance

Section 23 (3) sentence 5 of the German Income Tax Act provides that gains stay tax free if the total gain from private disposals in the calendar year came to less than 1,000 euro. The Federal Ministry of Finance records in margin number 53 that this figure stood at 600 euro up to and including the 2023 assessment period. The word total matters: every private disposal of the year counts together, gains on gold or other assets included.

The German term is Freigrenze, an exemption limit, and it works differently from an allowance. An allowance would leave the first 1,000 euro untaxed and tax only the part above it. An exemption limit is a threshold: reach it and the whole gain becomes taxable, not only the excess. A worked example shows the difference. You buy crypto-assets for 12,000 euro on 10 March 2026 and sell them on 5 September 2026 for 13,400 euro. The gain is 1,400 euro, and there were no other private disposals. Because 1,400 euro is not less than 1,000 euro, the entire gain of 1,400 euro is taxable, not merely the 400 euro above the line. With a gain of 999 euro everything would have stayed tax free; one euro more, at exactly 1,000 euro, and the full 1,000 euro would have been taxable.

How much tax falls due then depends on your personal rate under section 32a of the Income Tax Act. The version in force states its figures expressly for assessment periods from 2026: up to a taxable income of 12,348 euro the income tax is zero, from 69,879 euro the marginal rate is 42 per cent, and from 277,826 euro it is 45 per cent. Those 42 or 45 per cent apply only to the part of income above the step, never to the whole income. The holding period calculator shows when the one year period for a single tranche ends.

Transaction by transaction: what counts as a sale

The commonest error concerns swaps. Margin number 54 of the circular makes clear that exchanging crypto-assets for euro, for goods, for services or for other crypto-assets amounts to a disposal; under margin number 55 the periods start again after every swap. Swap Bitcoin for Ether in January and you have sold and bought afresh, even though no euro ever moved.

Losses are the point at which many spreadsheets fall apart. Under section 23 (3) sentence 7 of the Income Tax Act they may be set off only up to the amount of the gains from private disposals of the same calendar year; sentence 8 allows a carry back to the previous year and a carry forward to later years under section 10d. They cannot be set against income from employment, from capital assets or from letting.

Staking and lending run through section 22 no. 3

Income from passive staking is as a rule taxed under section 22 no. 3 of the German Income Tax Act, per margin number 48 of the circular, and lending income likewise under margin number 65. This other income is not subject to income tax under section 22 no. 3 sentence 2 if, together with other income from services, it came to less than 256 euro in the calendar year. That 256 euro is an exemption limit as well, on the same logic as above: at 256 euro the full amount is taxable, not only the part above it.

Two points are often confused. First, the units received count as acquired and are valued at the market price at the moment they arrive; a fresh one year period under section 23 starts for them. Second, the disposal period is not extended to ten years merely because the holdings earned income: margin number 63 states that section 23 (1) sentence 1 no. 2 sentence 4 of the Income Tax Act does not apply to currency or payment tokens. How staking works technically and which risks come with it is set out in the article on staking, yield and risks.

FIFO, wallet by wallet, and the record keeping duties

Anyone who buys in tranches must be able to say which units were sold. Margin number 61 names individual identification as the principle. Where that is not possible, the units of a trading designation acquired first count as disposed of for the holding period, and the average method applies to the valuation; for simplicity it may be assumed that the units acquired first were sold first, that is FIFO. The addition matters: the view is taken wallet by wallet, and the method chosen must be kept within a wallet until it is fully sold. The average cost calculator sorts out the entry price per tranche.

On top of that come duties which the circular of 6 March 2025 sets out at length for the first time. Part III deals with the duties to file, to cooperate and to keep records from margin number 87 onwards; margin number 96 refers, for private assets, to sections 145 to 147 of the Fiscal Code. Margin number 103 lists what has to be documented, among it the consumption sequence chosen for each wallet, transfers within wallets and the other income from mining, forging, staking, lending and airdrops. Under margin number 106 the circular applies to all open cases from its publication in the Federal Tax Gazette (Bundessteuerblatt), and records kept differently outside the scope of the GoBD rules will not be objected to for assessment periods up to and including 2024.

How to prepare a German tax return

Start by pulling a complete list of every transaction for each calendar year: date, time, quantity, trading designation, euro value, fees, wallet or trading venue, transaction identifier. Then work out the gain on each disposal as the sale price less acquisition costs and less related expenses, and assign each transaction its own holding period. The sum of all gains and losses of the year decides the exemption limit of 1,000 euro; staking and lending run separately through the 256 euro.

The figures belong in annex SO (Anlage SO) of the German income tax return, staking and lending income likewise as other income. Keep the evidence, including the price source you valued with, and stay with your method. Two questions are worth settling early, because they drive the workload: whether your trading still counts as private asset management, and how you can evidence holdings from the time before you kept clean records. Both belong in a conversation with a German tax adviser, because this text is no substitute for advice in an individual case. If you are taxed outside Germany, none of the figures above apply to you and your own national rules decide. Which rules apply to providers across the European Union is covered in the article on the MiCA regulation, and terms such as wallet, token or airdrop are explained in the glossary.

Frequently asked questions

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