The one-year holding period
Germany still lets private investors realise crypto gains free of tax after twelve months, with no upper limit. That rule is unusual in Europe, it is genuinely available to residents regardless of citizenship — and it is easier to lose than most people realise.
- More than twelve months between acquisition and disposal: the gain is free of income tax, without limit.
- Every swap is a disposal and an acquisition — a new period starts for the asset received.
- Transfers between your own wallets do not reset the period, but you must be able to prove it.
- The €1,000 threshold is an exemption limit, not an allowance.
- Note: the ten-year extension is disapplied only by administrative concession, not by statute.
What the rule says
Crypto assets held privately are not investment income in Germany. They are "other assets", and that changes everything.
The Federal Fiscal Court confirmed in its judgment of 14 February 2023 (IX R 3/22) that individual crypto assets are assets for tax purposes and that disposals fall under section 23(1) sentence 1 no 2 of the Income Tax Act — private disposal transactions. They are not covered by the flat 25 per cent withholding tax that applies to shares and bonds.
Within twelve months, the gain is added to your other income and taxed at your personal rate — up to 45 per cent plus the solidarity surcharge, and church tax where applicable. That is materially worse than the flat rate on securities.
After twelve months, the gain is free of German income tax entirely, with no upper limit. There is no equivalent for shares. This asymmetry is the reason the rule matters so much in planning.
The €1,000 threshold
Gains from all private disposals in a calendar year — crypto, gold, collectibles — remain free of tax if together they come to less than €1,000. Note the word "less": at exactly €1,000 the whole amount becomes taxable, not merely the excess. It is an exemption limit (Freigrenze), not an allowance (Freibetrag), and the distinction costs people money every year.
When the period starts
Three different points in time are candidates. Which one applies depends on how you acquired the asset.
| How acquired | Relevant moment | Source |
|---|---|---|
| Bought on a centralised exchange | The time recorded by the exchange for the trade — not the later withdrawal to your wallet | Rn. 20, 55 |
| Direct purchase or DEX | For simplicity, the time shown in the wallet | Rn. 55 |
| Contract concluded earlier | The date the contract was concluded, if you can evidence it | Rn. 55 |
| Inherited or received as a gift | The predecessor's acquisition — you step into their shoes | Sec. 23(1) s. 3 EStG |
| Received from staking or lending | Time of receipt; for convenience the moment of claiming into the wallet | Rn. 48a |
The circular treats wallet timestamps as a simplification and expressly allows the underlying contract date to govern, provided you evidence it. Where a sale falls just outside or just inside the twelve months, that evidence can decide whether the entire gain is taxable. Few people invoke it.
What resets the period
The mistake is almost never the sale. It is what happened months earlier.
Exchanging Bitcoin for Ether disposes of the Bitcoin and acquires the Ether. Two tax events, one click. The gain on the Bitcoin is realised at that moment, and a fresh twelve-month period begins for the Ether.
The same applies to paying for goods or services in crypto, and to converting into a stablecoin. A stablecoin is not cash. Moving into USDT to "sit out" volatility is a disposal, and it starts the clock again.
Transfers between your own wallets and addresses. Withdrawing from an exchange to a hardware wallet. Moving between two of your own exchange accounts. None of these is a disposal, and the original acquisition data carries over.
The problem is evidential, not legal. Tax software books an outgoing transfer as a sale unless it knows the receiving address is yours. A list of your own addresses is the single most valuable document you can prepare.
- Resetsswap into another coin
- Resetsswap into a stablecoin
- Resetspaying for goods or services in crypto
- Neutraltransfer between your own wallets
- Neutralwithdrawal from an exchange to self-custody
- Carries overinheritance and gifts
Which units count as sold on a partial disposal is a separate question — and a contested one. Our article on wallet-by-wallet calculation (in German)
The ten-year question
The most frequently asked question from clients who stake or lend — and the answer is less reassuring than it first appears.
Section 23(1) sentence 1 no 2 sentence 4 of the Income Tax Act extends the holding period from one year to ten where an asset has been used as a source of income in at least one calendar year. On its wording, staking and lending could fall within it.
Paragraph 63 of the Federal Ministry of Finance circular of 6 March 2025 states that the extension does not apply to currency and payment tokens. That is the entire basis. It is not in the statute, and no court has confirmed it.
An administrative circular can be amended at any time, including to the taxpayer's detriment and without a transitional rule. The protection of legitimate expectations under section 176 of the Fiscal Code covers only the amendment of assessments already issued, not future years. Anyone relying today on staked holdings being tax free after one year is relying on administrative practice, not on a statutory guarantee.
This is one of the questions we raise in every initial consultation with clients who hold significant staked positions, because it changes how a multi-year plan should be built. Six further points in the circular that rest on concession rather than statute (in German)
Proving it
The exemption is not granted because it is true. It is granted because you can show it is true.
You carry the burden of proof for everything that reduces your tax — the acquisition date that establishes the exemption, the acquisition cost that reduces the gain, and the disposal sequence that determines which units were sold. Where that evidence is missing, the tax office estimates under section 162 of the Fiscal Code, and in practice that means acquisition cost of zero and no exemption.
Section 90(2) of the Fiscal Code imposes an enhanced duty to cooperate for cross-border matters, and it includes a duty to secure evidence in advance. You must obtain the records while you still can. Saying later that the platform is insolvent or no longer reachable does not help — that is precisely the situation the duty exists for.
Paragraph 89 of the circular is explicit: missing records and data losses, whether through insolvency of the platform or a hack, are to the taxpayer's detriment.
- A list of every exchange, wallet and address you have ever used, including dormant ones
- Raw exports in their original format, with the date of export
- Transfers between your own wallets marked as such, not booked as sales
- Records from foreign platforms downloaded now, not when asked
- Your chosen disposal-sequence method written down and applied consistently
Where the reform debate stands
Nothing has been decided. But the question comes up in every consultation, so here is the honest position.
Whether the one-year exemption survives, and whether crypto assets should instead fall under the flat-rate withholding tax that applies to securities, has been debated in Germany for several years. Motions in the Bundestag have so far failed. What began as a press leak on 8 and 9 September 2026 is now an official draft bill from the Federal Ministry of Finance: industry consultation runs until 6 October 2026, with cabinet consideration scheduled for 14 October 2026 — cabinet, the Bundestag and the Bundesrat are still pending. The full assessment, in German
We argue against bringing crypto assets within withholding tax, and we do so publicly — through the tax working group of the Blockchain Bundesverband, as former finance director of the Bitcoin Bundesverband, and as an expert witness before the Finance Committee of the Bundestag.
Three arguments carry that position: a crypto asset is not a share and embodies no rights against a company; economically identical transactions should not be taxed differently because of their technical wrapper; and reliable figures on current revenue from crypto taxation do not exist, so no one knows what a reform would change. Our expertise and the proceedings we run
The destination regime itself rests on unsettled ground
A point that rarely comes up in the public debate turns the fairness argument on its head: the constitutionality of the flat-rate withholding tax itself — the very regime crypto assets would move into — has never been settled by Germany's highest court. The Fiscal Court of Lower Saxony referred exactly that question to the Federal Constitutional Court by decision of 18 March 2022 (case 7 K 120/21): whether the flat 25% rate under section 32d(1) in conjunction with section 43(5) of the Income Tax Act is compatible with the equal-treatment guarantee in Article 3(1) of the Basic Law. The court itself considered the rule unconstitutional, since it privileges investment income at a flat 25% over wage income taxed progressively up to 45% under section 32a, without sufficient objective justification.
No ruling on the merits ever followed. The tax office granted the underlying claim, the parties declared the dispute resolved, and the Fiscal Court withdrew its own referral on 10 August 2022 once the question was no longer material to the case. The Federal Constitutional Court (case 2 BvL 6/22) closed the file on 9 December 2022 without addressing the constitutional question at all.
If Article 3 of the Basic Law is the standard for treating crypto assets the same as shares, the constitutionally cleaner route would not necessarily be to draw crypto into an already-doubtful regime — bringing shares back into the holding-period system that today covers crypto, under section 23 EStG, would satisfy the same equal-treatment logic just as well. A tax regime a court has already doubted does not become more constitutional by adding another asset class to it.
What that means for you: plan on the law as it stands, but do not build a structure that only works if the rule survives another decade. Where a decision can reasonably be brought forward, bringing it forward has value beyond the tax result.
Questions and answers
Is the one-year rule real?
Does swapping one coin for another reset the clock?
Does moving coins between my own wallets reset it?
Is the ten-year extension applied to crypto?
What is the €1,000 threshold?
Is the holding period going to be abolished?
I am not a German citizen. Does this apply to me?
Legal position: 30 September 2026. Sources: section 23(1) sentence 1 no 2 and sentence 3 EStG; section 22 no 3 EStG; sections 90, 162 of the Fiscal Code; Federal Fiscal Court judgment of 14 February 2023, IX R 3/22; Federal Ministry of Finance circular of 6 March 2025, in particular paragraphs 20, 48a, 55, 63 and 89. On the flat-rate withholding tax: Fiscal Court of Lower Saxony, decisions of 18 March 2022 and 10 August 2022, both 7 K 120/21; Federal Constitutional Court, 2 BvL 6/22 (closed 9 December 2022) — see also our guest contribution at BTC-ECHO (German).
The assessment of paragraph 63 as a revocable concession reflects our own legal view. This article is not advice on an individual case. Where this English text and the German version differ, the German version governs.