Crypto Tax in Germany: The 1-Year Rule That Can Make Your Entire Gain Tax-Free

A few years ago a colleague moved from New York to Berlin for a job. Within six months he became the most insufferable version of himself — not because of Berlin, but because he'd discovered German crypto tax law. "If I just don't sell for a year," he kept saying, "it's all zero." I assumed he'd oversimplified something. He hadn't.

Germany has what is plausibly the friendliest major-country rule for long-term crypto holders in the world: hold your coins for at least a year and the gain is completely exempt from income tax, no matter how large it is. There's no upper cap, no progressive scale, no reduced-but-not-zero rate. Zero is zero.

The catch is that everything inside that year is taxed hard, and there's one staking-shaped exception that has caused real confusion. Here's the whole picture.

The legal basis: §23 EStG

Germany doesn't have a separate crypto tax law. Cryptocurrency is treated as an "anderes Wirtschaftsgut" — another (non-security) asset — and gains from selling it are private Veräußerungsgeschäfte, private disposal transactions, governed by §23 Einkommensteuergesetz. That's the same paragraph that covers selling your old car privately or flipping furniture. Crypto just happens to be the lucrative version.

The paragraph has two independent escape routes:

1. The holding period. If more than a year passes between acquisition and disposal, the gain is simply outside the tax system.
2. The Freigrenze. If you sell within the year, the gain is still exempt as long as the total profit from all §23 transactions in that calendar year is under €1,000.

That first route is the famous one, and its scale is worth pausing on. In the US, a long-term gain still costs you 15–20%. In Australia, the discount halves the taxable gain. In Germany, after 365 days, a €100,000 Bitcoin gain produces an income-tax bill of €0. Not €0 on a portion — the whole thing. I ran the numbers side by side for all five countries in the holding-period comparison guide; Germany is the outlier.

What selling within the first year actually costs

Short-term gains are added to your other income and taxed at your personal income-tax rate — up to 42%, and 45% on the portion above the very top threshold (the "Reichensteuer"). On top of that comes the Solidaritätszuschlag, 5.5% of the income tax itself, though it only bites above a certain tax amount. If you're a church member, Kirchensteuer adds another 8 or 9 percent on top of the income tax.

A quick example. You buy €10,000 of ETH in March and sell it in November for €14,000 — a €4,000 gain, all within the year:

• €4,000 exceeds the €1,000 Freigrenze, so the full €4,000 is taxable, not €3,000.
• At a marginal rate of 35% plus Soli, the tax is roughly €1,477.
• Wait one more year and the same sale costs €0. That €1,477 is the explicit price of impatience.

You can verify the short-term math on the German calculator — it handles the Freigrenze and the Soli automatically and speaks German throughout, since the official §23 EStG text is worth a look if you're so inclined.

The €1,000 trap: Freigrenze, not Freibetrag

German tax law gives you two kinds of allowances, and the difference costs people money. A Freibetrag is a deduction: only the amount above it is taxed. A Freigrenze is a cliff edge — stay below, everything is free; cross it by one euro and the entire amount is taxable.

§23 uses a Freigrenze (raised to €1,000 for assessment periods starting 2024). Two details people miss:

• It's shared across everything §23 covers. Short-term crypto gains sit in the same pot as gains from selling other private assets within their own windows (art, jewelry, precious metals). If you flipped a gold bar at €600 profit and took €500 of short-term crypto gains in the same year, the combined €1,100 is fully taxable.
• Losses offset gains inside the pot. Short-term crypto losses reduce your §23 total — but they can't reduce your salary income; unused losses carry forward within the private-sale category.

Counting the days: 365, not "sometime next year"

The period is a year measured under the general rules of the Abgabenordnung (§108 AO) — meaning from acquisition to disposal, 365 days must be behind you. Buy on March 10, 2026 and the earliest clean sale date is generally March 10, 2027 (the anniversary date), since the period runs until the end of the corresponding day a year later.

Most German Steuerberater will tell you, with a weary look, to sell on day 366 anyway. Off-by-one arguments about time zones, exchange execution timestamps and CET-vs-UTC trade times are not worth risking a six-figure exemption for the price of one day. If you're planning a large disposal, set the calendar reminder for the day after the anniversary.

The staking caveat — and what the BFH actually changed

Here's the part that scared everyone. A 2022 BMF (finance ministry) guidance letter stated that if coins had been used to generate income — staking, lending, liquidity provision — the holding period stretched from one year to ten years. Suddenly half the Ethereum in Germany looked like it couldn't be sold tax-free until the 2030s.

Then the courts fixed most of it. In February 2024 the Bundesfinanzhof (Federal Fiscal Court, case IX R 3/22) ruled that the ten-year period only applies when you have effectively lent your coins to a third party, giving up possession in exchange for income — think centralized "earn" and lending programs on an exchange. Mere staking in a proof-of-stake network, where you keep control of your own coins, does not extend the one-year period.

Practical reading in 2026:

• Self-custodied PoS staking (you hold the keys, you validate or delegate without surrendering ownership): the 1-year exemption stands.
• Exchange lending / earn products / giving a platform your coins for yield: the conservative assumption is still the 10-year window — your coins were a Kapitalforderung against the platform.
• Staking rewards themselves are income at receipt, valued in euros on the day received; the rewarded coins then start their own holding clock at that euro basis.

The Finanzämter were still digesting the ruling through 2024–2025 and the line between "delegating" and "lending" is genuinely murky for some platforms. If you've staked meaningful amounts, this is the one place a German tax advisor earns their fee — don't build a six-figure exit on a forum comment.

What doesn't reset or trigger anything

A few mechanics that come up constantly:

• Moving coins between your own wallets is not a disposal and doesn't restart the clock. You just need to prove both wallets were yours — export histories and keep the transaction maps.
• Crypto-to-crypto swaps are disposals of the outgoing coin, as I covered in the coin-to-coin tax guide. But here's the German twist: if the outgoing coin is past the one-year line, the swap is tax-free even though you never held cash. The new coin simply starts its own fresh 365-day clock.
• Buying and holding forever triggers nothing, ever. The tax only attaches to disposals.

For identifying which coins were consumed in a partial sale, German practice generally accepts FIFO (oldest coins sold first); LIFO is not accepted. Most people don't choose at all — their tax software defaults to FIFO, which is fine as long as it's applied consistently across the whole year.

Where it goes on the tax return

Taxable short-term gains and losses are declared on Anlage SO, the schedule for other income and private disposals. Fully exempt sales beyond the one-year period don't have to be reported as §23 income at all — though keeping the acquisition records is your responsibility: if the Finanzamt ever asks, you're the one who must prove the holding period. Exchange statements, wallet exports and a simple spreadsheet with purchase date, purchase price in euros, and source are enough for most people.

The honest takeaway

Germany has effectively written a tax incentive for exactly the behavior financial advisors nag you into anyway: buy, hold, don't churn. The people hurt by §23 aren't long-term holders — they're active traders swapping weekly and yield farmers who lent coins into ten-year windows without realizing it.

If you're resident in Germany and sitting on a gain, the single most valuable piece of information you have is the exact date of acquisition. Pull that up first. If 365 days have passed and the coins never left your custody into a lending product, the number you owe on that sale may genuinely be zero. If not, the German calculator will show you exactly what waiting — or selling now — is worth.

This is general information, not tax advice. German case law on staking and lending is recent and still being applied inconsistently by local tax offices, and your residency status matters. For large positions or lending histories, get advice from a qualified German Steuerberater before selling.