Question 1

Is crypto tax-free in Germany after 1 year?

Accepted Answer

Yes. Germany has one of the most investor-friendly crypto tax regimes in the world. Under §23 EStG (Einkommensteuergesetz), cryptocurrency gains are completely tax-free if you held the asset for more than one year before selling. This holding period is measured from the date of acquisition to the date of disposal. If you hold Bitcoin for 366 days and then sell, you pay zero tax on the gain, regardless of the amount. This exemption is a powerful incentive for long-term holding strategies in Germany.

Question 2

What is the €1,000 Freigrenze and how does it work?

Accepted Answer

The €1,000 Freigrenze (exemption threshold) is an annual allowance for private disposal gains (Sonstige Einkünfte, §22 EStG). If your total crypto gains — along with other private disposals like precious metals and foreign currency — are below €1,000 in a calendar year, all those gains are completely tax-exempt. Crucially, this is a Freigrenze (threshold), not a Freibetrag (allowance). If your gains reach or exceed €1,000, the entire amount is taxable, not just the excess. For example, €999 in gains is tax-free; €1,001 in gains means all €1,001 is taxable. The threshold was €600 through the 2023 tax year and was raised to €1,000 from 2024 by the Wachstumschancengesetz.

Question 3

What tax rate applies to short-term crypto gains in Germany?

Accepted Answer

If you sell crypto within 12 months of purchase, your gains are treated as Sonstige Einkünfte (other income) under §22 No. 2 EStG and taxed at your personal income tax rate (Einkommensteuer). Germany uses a progressive tax system: 14% for income above the basic allowance (€11,604 for 2024), rising progressively to 42% for income above €66,760, and 45% for income above €277,826 (Reichensteuer). The solidarity surcharge (Solidaritätszuschlag) of 5.5% on income tax may also apply, adding up to 2.5% in effective tax on high earners.

Question 4

Which cost basis method does Germany use for crypto — FIFO or LIFO?

Accepted Answer

Germany applies the FIFO (First In, First Out) method for cryptocurrency, as confirmed by the Bundesministerium der Finanzen (BMF) in its 2022 guidance letter. This means the coins you acquired first are treated as sold first. In a rising market, FIFO causes older, lower-cost lots to be recognised as sold, potentially producing larger gains. However, since older lots are also closer to the one-year tax-free threshold, FIFO often works in your favour for long-term investors.

Question 5

How does the 1-year clock work for staking and DeFi?

Accepted Answer

The BMF guidance (2022) provides important clarity on staking: if you receive staking rewards, those rewards are treated as income taxable at the time of receipt, but they also start a fresh 10-year holding period for the reward tokens themselves (not 1 year). The extended 10-year period applies because the Finanzgericht Köln and later the BMF position treats staking as a "Leistung" (service), making the received tokens subject to the §22 No. 3 EStG extended holding period. This is a significant planning consideration for DeFi yield farmers and stakers.

Question 6

Where do I report crypto gains on my German tax return?

Accepted Answer

Crypto gains from private disposals are reported in Anlage SO (Sonstige Einkünfte — Other Income) of your German income tax return (Einkommensteuererklärung). You report each disposal separately: date of acquisition, date of sale, proceeds, cost basis, and resulting gain or loss. Losses from crypto can be offset against gains from other private disposals (such as forex or precious metals), but they cannot be offset against income from employment or capital income from stocks. Losses can be carried forward to future years.

Question 7

When is the tax return deadline in Germany?

Accepted Answer

The standard deadline for filing your German income tax return is 31 July of the following year (for the 2024 tax year: 31 July 2025). If you use a tax adviser (Steuerberater), the deadline is extended to the last day of February of the year after that (28 February 2026 for the 2024 tax year). Filing can be done electronically via ELSTER (the official German tax portal). Interest is charged on late payments at 1.8% per year from 15 months after the end of the tax year.

Question 8

Does the €801 Sparerpauschbetrag (saver allowance) apply to crypto?

Accepted Answer

No. The €801 Sparerpauschbetrag (€1,602 for married couples) is a tax allowance for capital income (Kapitalerträge) such as dividends, interest, and capital gains from stocks. Crypto gains taxed as Sonstige Einkünfte (private disposals under §23 EStG) are separate from capital income and cannot benefit from the Sparerpauschbetrag. The two income types are calculated and taxed entirely independently on the German tax return.

German Crypto Tax Calculator — Steuerfrei nach 1 Jahr

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