Crypto taxation in Germany: tax-free after a one-year holding period

01A private asset, not a financial instrument

German tax authorities treat crypto-assets held by an individual as another economic asset (anderes Wirtschaftsgut) belonging to private assets, in the same way as precious metals or collectibles. Their disposal therefore falls under the regime for private sales transactions (private Veräußerungsgeschäfte), article 23 EStG, rather than a standard capital gains regime for securities.

This classification was confirmed by the Federal Fiscal Court (Bundesfinanzhof), ruling IX R 3/22 of 14 February 2023, which upheld the classification of Bitcoin and Ether as a taxable Wirtschaftsgut. The Federal Ministry of Finance detailed its administrative doctrine in a letter dated 6 March 2025, "Einzelfragen zur ertragsteuerrechtlichen Behandlung bestimmter Kryptowerte", which replaces the first letter of 10 May 2022 and adds, among other things, documentation obligations.

02The headline rule: full exemption after one year of holding

If the crypto being disposed of has been held for more than one year between acquisition and disposal, the capital gain is fully tax-exempt, regardless of its amount. This is the most notable feature of the German regime: none of the other countries reviewed by Uncrypt to date offer a fully tax-free exit, even for a gain of several hundred thousand euros.

The reference text, article 23(1) no. 2 EStG, covers "disposal transactions relating to other economic assets for which the period between acquisition and disposal does not exceed one year": it is this same sentence, read in reverse, that grounds the exemption beyond that period.

03Under one year: progressive income tax, not a flat rate

A disposal made within one year of acquisition is taxable. Unlike France or Italy, Germany applies no flat, final withholding rate to short-term crypto gains: the gain is added to the individual's other taxable income for the year and follows the progressive income tax scale (up to 45% in the top bracket), plus the solidarity surcharge (Solidaritätszuschlag) and, where applicable, church tax (Kirchensteuer). For a taxpayer already in a high marginal bracket, the real cost can therefore exceed the French or Italian flat rate; for a low-income taxpayer, it can be zero.

04The 1,000 € exemption threshold

Even within the one-year period, gains remain exempt if the total gains from all private sales transactions for the year (article 23, not limited to crypto-assets: collectibles, foreign currencies and precious metals count toward the same total) stay below 1,000 €. This is a Freigrenze (threshold, not an allowance): the moment the total exceeds this amount by even one euro, the entire gain becomes taxable, not just the excess.

05What triggers tax: crypto-to-crypto swaps included

Taxable events include: converting to euros, buying a good or service paid for in crypto, and, a notable difference from France, exchanging one cryptocurrency for another. Case law from the Bundesfinanzhof treats this kind of swap as a full disposal: the crypto received is deemed acquired at its market value at the time of the swap, which also serves as the disposal price for calculating the gain on the crypto given up. A simple transfer between two wallets or platforms of which you remain the sole holder is not a disposal, however.

06Staking and lending: a point still debated

Uncertainty has long existed over whether using crypto-assets to generate income (staking, lending) extends the one-year holding period to ten years, by analogy with the rule applicable to other income-generating assets. The BMF letter of 6 March 2025 addressed this point without fully resolving the ambiguity according to the specialist commentary consulted. Uncrypt does not settle this point here: a portfolio with meaningful staking or lending activity warrants a check with a Steuerberater before relying on the one-year exemption.

07Filing: Anlage SO

Gains taxable under article 23 EStG are declared in the Anlage SO ("sonstige Einkünfte", other income) schedule of the annual income tax return. The BMF letter of 6 March 2025 strengthened documentation requirements: keeping a complete transaction history (dates, euro values at the time of each operation, platforms used) remains the best protection in the event of an audit.