Anyone investing in cryptocurrency sooner or later asks the same question: what actually remains after a sale? In Germany, the answer depends less on the coin than on the calendar. Unlike shares, there is no flat capital gains tax here. Instead, a logic applies that surprises many — and that is currently in motion.
For tax purposes, Bitcoin, Ether and comparable tokens are treated in Germany neither as currency nor as a capital investment, but as "other assets". The relevant provision is therefore Section 23 of the German Income Tax Act (EStG), which governs private sale transactions. This has a pleasant and an unpleasant side. The pleasant one: there is a path to complete tax exemption. The unpleasant one: those who miss it pay not 25 percent, but their personal income tax rate — which reaches up to 45 percent.
The central point is the holding period. Anyone who holds a cryptocurrency for longer than one year and sells only afterwards realises the gain tax-free — regardless of the amount. Whether it concerns a thousand euros or a six-figure sum is irrelevant once the period has elapsed.
The period begins the day after acquisition and ends one year later. It is strict: a sale on the final day of the period remains taxable, one day beyond it is tax-free. Anyone buying on 15 January should therefore sell no earlier than 16 January of the following year.
What counts as a sale matters here. It is not only the exchange into euros that triggers taxation, but also the exchange of one cryptocurrency for another. Anyone swapping Bitcoin for Ether has, for tax purposes, sold and reacquired — and the period starts afresh for the newly acquired holding.
Selling earlier does not automatically mean taxation. An exemption threshold of 1,000 euros per calendar year applies, in force since 2024. If the total gain from private sale transactions remains below this, no tax is due.
The word threshold is decisive. This is not a tax-free allowance. If the limit is exceeded by even one euro, the entire gain becomes taxable — not merely the excess portion. It is then taxed at the personal income tax rate.
Income from the ongoing use of cryptocurrencies follows different rules. Staking rewards, lending interest and mining income count as other income under Section 22 No. 3 EStG. Taxation occurs upon receipt, based on the euro value of the coins received at the moment of inflow. A separate exemption threshold of 256 euros per year applies here.
An earlier concern has since been laid to rest: using coins for staking or lending does not extend the holding period to ten years. Staked or lent holdings, too, can be sold tax-free after one year — as the Federal Ministry of Finance has clarified.
Two developments deserve attention. Since 2026, the EU directive DAC8 has required crypto exchanges to report transaction data automatically to the tax authorities. Clean documentation is therefore no longer a matter of goodwill, but a prerequisite.
Beyond this, the abolition of the one-year tax exemption is being discussed at the political level. Under consideration is a removal of the holding period from the 2027 assessment period onwards, combined with an alignment towards the taxation of shares. The legislative process is not concluded, and the retroactive capture of value increases that have already accrued tax-free would be constitutionally problematic. Those holding positions should nonetheless follow developments closely.
German crypto taxation rewards patience and penalises negligence. Anyone who documents their acquisition dates, separates HODL and trading holdings, and keeps an eye on the deadlines retains control over their tax burden. For larger holdings, international circumstances or complex DeFi structures, an individual review is worthwhile — particularly now, while the legal position is shifting.
