The timing of your crypto sale in Germany can significantly impact your tax bill. Under German tax law, the one-year holding rule determines whether your crypto profits are taxable or completely tax-free. Selling or exchanging your crypto within one year of purchase can trigger income tax if your annual gains exceed €1,000.
However, if you hold your crypto for more than a year, your profits become entirely exempt from tax. This simple rule encourages long-term investment but can create confusion for short-term traders. Understanding how this rule applies to various types of cryptocurrency transactions is crucial for staying compliant and avoiding unexpected tax liabilities.
The One-Year Rule Explained
Germany’s crypto tax system is based on a unique approach that treats cryptocurrencies as private assets rather than financial instruments. This means the duration you hold your crypto directly impacts whether your profits are taxable or exempt. The following subsections explain how this rule operates under German law.
Legal Basis Under § 23 EStG
Under §23 (Section 23) of the German Income Tax Act (EStG), cryptocurrencies are considered private assets. Any profit made from selling, swapping, or spending crypto within twelve months is classified as a private sale transaction and is subject to income tax. This law applies to all cryptocurrencies, including Bitcoin, Ethereum, and stablecoins.
Why Does the Holding Period Matter?
The holding period determines whether a transaction is taxable. If you sell crypto within one year, any profit exceeding €1,000 becomes taxable as income.
However, if you hold the same crypto for more than a year before selling, the profit becomes tax-free, encouraging long-term holding among investors.
How the €1,000 Exemption Works?
Germany provides an annual tax-free allowance of €1,000 for private sale transactions. This exemption applies to total annual gains from all crypto activities combined. If your profits remain below this limit, you are not required to file a tax return for those gains. Exceeding it, however, triggers full taxation on the entire amount.
When Crypto Disposal Under One Year Becomes Taxable?
Selling or exchanging crypto within twelve months of purchase is treated as a taxable private sale in Germany. The type of transaction—whether converting to fiat, swapping tokens, or spending cryptocurrency—determines how income tax applies. The sections below provide a detailed explanation of each scenario.
Selling Crypto for Fiat
When you sell your crypto for euros or another fiat currency within one year, any profit exceeding €1,000 is subject to income tax. The taxable gain is calculated by subtracting your purchase price and transaction fees from the selling price. This rule applies even if you make the sale on a foreign exchange.
Swapping Between Cryptocurrencies
Exchanging one cryptocurrency for another is considered a taxable event in Germany. For instance, trading Ethereum for Bitcoin within a year triggers taxation if the profit from the trade exceeds €1,000. Each swap is treated as a sale under § 23 EStG, even though no fiat money changes hands.
Spending Crypto on Goods or Services
Using crypto to purchase products or services is treated the same as selling it. If the crypto has increased in value since acquisition and you spend it within one year, that gain becomes taxable income. This applies to everything from online shopping to booking travel using crypto.
Trading Stablecoins Within a Year
Stablecoins such as USDT, USDC, or BUSD are also covered under this rule. Any gain realised from trading or exchanging stablecoins held for less than one year is taxable, even if the price difference seems minimal. The Finanzamt treats these transactions the same as other crypto disposals.
Also Read: How to Report Crypto on Taxes in Germany?
Impact of Staking, Lending, and Mining on the One-Year Rule
Staking, lending, and mining add an extra layer of complexity to Germany’s one-year crypto rule. These activities can extend the holding period or create additional taxable income depending on how and when the assets are used. The following subsections explain how each activity affects taxation.
Extended Holding Period for Staked or Lent Assets
When you use your crypto for staking or lending, the one-year tax-free period resets. Once the staking or lending period ends, you must hold the asset for another full year before any gains become tax-free. For example, if you staked Ethereum for six months, the clock restarts after you regain control of your tokens.
Taxation of Staking and Mining Income
Earnings from staking and mining are classified as other income under German tax law. You’ll owe taxes if your additional income from these activities exceeds €256 in a calendar year. This threshold applies to all forms of earned crypto rewards, including validator income, staking pools, and mining payouts.
Examples of Taxable and Non-Taxable Scenarios
The one-year holding rule creates a clear distinction between taxable and tax-free crypto activities in Germany. Whether your gains are subject to income tax depends on how long you held the asset, whether staking or mining was involved, and the amount of profit earned. The table below outlines common scenarios and their tax outcomes.
Scenario | Tax Treatment | Explanation |
Selling Bitcoin after 8 months | Taxable | Profits exceeding €1,000 from crypto sold within one year are subject to income tax. |
Selling Bitcoin after 14 months | Tax-free | Gains become tax-exempt once the one-year holding period has passed. |
Selling staked tokens within a year | Taxable | Staking resets the holding period, making profits taxable if sold before a new year passes. |
Mining rewards sold soon after earning | Taxable | Treated as additional income; taxable if annual crypto earnings exceed €256. |
How to Calculate Short-Term Crypto Taxes in Germany?
Calculating short-term crypto taxes can be challenging, especially for active traders managing multiple wallets or exchanges. The process involves determining accurate cost bases, tracking gains across transactions, and reporting them under the correct tax category. The following subsections explain how this calculation works.
Determining Cost Basis and Profit
Your taxable profit equals the selling price minus the purchase cost, including any associated fees. For example, if you bought Bitcoin for €10,000 and sold it within a year for €12,500, your taxable gain would be €2,500. Transaction costs, exchange fees, and network charges can be deducted to reduce taxable income.
Tracking Multiple Transactions
Germany applies the FIFO (First In, First Out) method to calculate which coins are sold first. This means the earliest purchased coins are considered sold first when determining profit. Consistent recordkeeping across platforms ensures accurate cost basis calculations and prevents discrepancies during audits.
Declaring Short-Term Crypto Income
Short-term gains from selling or swapping crypto within one year are reported under the “Other Income (Sonstige Einkünfte)” section of your German tax return. If total annual profits exceed €1,000, you must include them in your income statement and pay the applicable income tax based on your tax bracket.
How Can KoinX Help With Your Capital Gains Taxes In Germany?
Filing short-term crypto taxes in Germany can be stressful, especially when dealing with hundreds of trades across multiple wallets and exchanges. Many investors struggle to track cost bases, apply the correct one-year rule, and calculate gains accurately. KoinX, a leading crypto tax software, simplifies this entire process by automatically consolidating transactions and generating BZSt-compliant tax reports, ensuring every short-term crypto gain is reported correctly and on time.
Automatic Data Imports
KoinX integrates seamlessly with over 800 crypto exchanges, wallets, and blockchains, automatically pulling your complete transaction history in seconds. This feature ensures every sale, swap, or staking reward is accurately recorded, helping you maintain precise tax data without manual entry or missing information.
BZSt-Compliant Tax Reports
KoinX creates detailed reports that comply with Bundeszentralamt für Steuern (BZSt) standards. Each report captures your short-term profits, staking rewards, and crypto swaps, formatted for direct submission during tax filing. This guarantees 100% alignment with German income tax rules and reduces the risk of audit issues.
Portfolio Insights
With real-time analytics, KoinX offers complete visibility into your holdings, gains, and losses. It helps you track performance across wallets, identify taxable events instantly, and forecast future liabilities. These insights make it easier to plan your trades efficiently and minimise unnecessary short-term tax exposure.
Error-Free Calculations
KoinX automates every step of the tax process, from cost basis tracking to profit computation. It eliminates manual errors, ensuring your filings are accurate and audit-ready. Whether you’re managing ten or ten thousand transactions, KoinX simplifies compliance while saving you time and effort.
Don’t risk errors or missed deadlines. Use KoinX today to file your crypto taxes accurately and stay fully compliant with German tax regulations today.
Conclusion
Selling crypto within one year in Germany can turn your gains into taxable income if your profits exceed €1,000. Acting quickly and maintaining accurate records ensures you stay compliant with § 23 EStG while avoiding unnecessary penalties and late fees.
Accurate tax reporting is vital for crypto investors who trade frequently or earn income through staking and mining. KoinX simplifies this process by providing automated, BZSt-compliant tax reports that track every transaction seamlessly. Start using KoinX today to file your short-term crypto taxes accurately and confidently while staying compliant with German tax regulations.
Frequently Asked Questions
Does Transferring Crypto Between Wallets Trigger Tax?
No. Moving your crypto between personal wallets or exchanges does not count as a taxable event. Tax liability only arises when you sell, swap, or spend crypto, resulting in an actual profit.
Are Airdrops And Forks Taxed Differently From Sales?
Yes. Airdrops and hard forks are treated as income rather than capital gains. Their value at the time of receipt is taxable as additional income, separate from profits earned through trading or sales.
Can Losses From Short-Term Trades Be Offset?
Yes. Losses from short-term crypto trades can offset other private sale gains made in the same tax year. However, they cannot be carried forward or used to offset regular income or long-term investment profits.
How Does The One-Year Rule Apply To NFTs?
NFTs follow the same private sale rules as cryptocurrencies. Selling an NFT within a year of purchase is taxable if annual profits exceed €1,000, but gains become tax-free once the holding period surpasses one year.
