Germany Crypto Trading Tax Guide 2025

What is Crypto Trading?

Crypto trading involves buying, selling, or exchanging cryptocurrencies. German tax law (Finanzamt) treats cryptocurrency as other economic goods (andere Wirtschaftsgüter), meaning trading activities are taxed under private sales rules (§23 EStG). Common trading activities include:

• Spot trading: Buying and selling crypto on exchanges (Coinbase, Kraken, Binance, Bitpanda, Bitvavo)
• Crypto-to-crypto swaps: Trading BTC for ETH, ETH for SOL, etc.
• Day trading: Multiple trades within the same day
• Swing trading: Holding positions for days or weeks
• Long-term investing: Buy and hold strategies (most tax-efficient)
• DeFi trading: Swaps on Uniswap, SushiSwap, PancakeSwap

German Tax Treatment of Crypto Trading

Germany has one of the most favorable crypto tax systems in the world: gains from crypto held for more than 1 year are completely tax-free.

Legal Basis: §23 EStG (Private Sales)

Cryptocurrency falls under §23(1) No. 2 of the German Income Tax Act (Einkommensteuergesetz - EStG) as private sales transactions (private Veräußerungsgeschäfte):

"Private sales transactions are the sale of other economic goods where the period between acquisition and sale does not exceed one year."

The 1-Year Rule

This is the most important rule in German crypto taxation:

• Held ≤ 1 year: Profits are taxable as income (0-45% tax rate)
• Held > 1 year: Profits are COMPLETELY TAX-FREE

Unlike many countries, there's no reduced rate for long-term holdings - it's simply tax-free after 1 year.

What Qualifies as a Taxable Event?

The following activities trigger taxable events (if held ≤ 1 year):

• Selling crypto for EUR/fiat - BTC → EUR
• Trading crypto for crypto - BTC → ETH, ETH → SOL
• Using crypto to buy goods/services - Pay with Bitcoin
• Trading crypto for stablecoins - ETH → USDT (yes, taxable if ≤ 1 year)

Non-Taxable Events

• Buying crypto with EUR (no tax until you sell)
• Transferring crypto between your own wallets
• Holding crypto (no tax on unrealized gains)
• Selling crypto held for more than 1 year (TAX-FREE)
• Gifting crypto (recipient inherits your acquisition date and cost basis)

€600 Annual Exemption (Freigrenze)

Germany provides an annual exemption of €600 for all private sales transactions combined (Freigrenze, not Freibetrag).

How It Works

• If your total profits from crypto (and other private sales) are €600 or less, they are tax-free
• If your profits exceed €600, the entire amount is taxable (not just the excess)

Example: Exemption vs Taxable

Scenario 1: Under €600

• You have €550 in crypto trading profits (held ≤ 1 year)
• Result: €0 tax (under the €600 threshold)

Scenario 2: Over €600

• You have €650 in crypto trading profits (held ≤ 1 year)
• Result: €650 is fully taxable (threshold exceeded)

Important: The €600 limit applies to the combined total of all private sales (crypto, physical gold, art, etc.), not just crypto.

Income Tax Rates on Crypto Gains

Short-term crypto gains (held ≤ 1 year, exceeding €600) are taxed as other income (Sonstige Einkünfte) at your progressive income tax rate.

German Income Tax Rates (2025)

Note: Plus Solidarity surcharge (Solidaritätszuschlag) of 5.5% on income tax (phased out for most taxpayers) and church tax (Kirchensteuer) of 8-9% if applicable

Effective Tax Rate Example

If your marginal tax rate is 42%, and you have €10,000 in short-term crypto gains:

• Income tax: €10,000 × 42% = €4,200
• Solidarity surcharge: €4,200 × 5.5% = €231 (if applicable)
• Church tax: €4,200 × 9% = €378 (if applicable)
• Total tax: Up to €4,809 (48.09%)

FIFO Method (First-In, First-Out)

German tax law requires the FIFO method (First-In, First-Out) for determining which crypto units you're disposing of and calculating the holding period.

How FIFO Works

When you sell crypto, you must dispose of the oldest units first.

Example: FIFO Calculation

Purchases:

• January 1, 2024: Buy 1 BTC for €30,000
• July 1, 2024: Buy 1 BTC for €50,000
• December 1, 2024: Buy 1 BTC for €45,000

Sale: August 1, 2025, sell 1.5 BTC for €70,000 each (€105,000 total)

FIFO allocation:

• First 1 BTC: January purchase (held 19 months) → TAX-FREE
• Next 0.5 BTC: July purchase (held 13 months) → TAX-FREE

Result: All gains are tax-free because both parcels were held for more than 1 year.

Alternative Scenario: Short-Term Sale

Same purchases, but sell on June 1, 2024:

• Sell 1 BTC for €55,000
• FIFO: Dispose of January BTC (held 5 months)
• Cost basis: €30,000
• Profit: €25,000
• Taxable: €25,000 (held ≤ 1 year)

Crypto-to-Crypto Trades

Trading one cryptocurrency for another is a taxable disposal (if held ≤ 1 year).

Example: BTC to ETH Trade

You bought 0.5 BTC for €20,000 in March 2024. In September 2024 (6 months later), when BTC is worth €60,000, you trade 0.5 BTC for 15 ETH.

Tax treatment:

• Disposal value = 0.5 BTC fair market value = €30,000
• Cost basis = €20,000
• Profit = €30,000 - €20,000 = €10,000
• Holding period = 6 months (≤ 1 year)
• Taxable profit: €10,000

Your new acquisition date for the 15 ETH is September 2024, with a cost basis of €30,000 (€2,000 per ETH).

Stablecoin Trades

Trading crypto for stablecoins is also a taxable event (if held ≤ 1 year):

• ETH → USDT = Disposal of ETH (calculate profit/loss)
• USDT → BTC = Disposal of USDT (usually minimal profit/loss if USDT ≈ €1)

Holding Period Calculation

The 1-year holding period is calculated to the day:

Exact Calculation

• Start date: Day of acquisition
• End date: Day of disposal
• Requirement: More than 365 days (at least 366 days, or 367 in leap years)

Example: Holding Period

• Acquired: March 15, 2024
• 1 year later: March 15, 2025
• Tax-free disposal: March 16, 2025 onwards

Strategic Planning

If you're approaching the 1-year mark with a large gain, wait until after the anniversary to sell. The tax savings can be substantial:

Example:

• Profit: €50,000
• Tax rate: 42% + 5.5% solidarity + 9% church = ~48%
• Sell at 11 months: €24,000 tax
• Sell at 13 months: €0 tax
• Savings: €24,000

Losses and Loss Offsetting

Losses from crypto trading (held ≤ 1 year) can offset profits from other private sales transactions.

Using Losses

• Same year: Offset losses against gains from private sales in the current year
• Carry forward: Unused losses carry forward indefinitely to offset future private sales gains
• Cannot offset employment income: Private sales losses cannot offset salary, wages, or business income
• No carry back: Cannot apply losses to previous years

Important: Long-Term Losses Don't Matter

If you sell crypto at a loss after holding for more than 1 year, you cannot claim the loss for tax purposes. Since long-term gains are tax-free, long-term losses are not deductible.

Example:

• Buy 1 BTC for €50,000 in Jan 2023
• Sell for €30,000 in Feb 2024 (held 13 months)
• Loss: €20,000
• Tax impact: €0 (cannot claim loss)

How to Report Crypto Trading on Your Tax Return

Anlage SO (Other Income)

Report crypto trading profits on Anlage SO (Anlage für Sonstige Einkünfte) of your income tax return (Einkommensteuererklärung).

Required Information

In Section "Private Veräußerungsgeschäfte" (Private Sales Transactions), report:

• Line 40-48: Private sales transactions
• Sales proceeds: Total proceeds from crypto disposals (held ≤ 1 year)
• Acquisition costs: Total cost basis + fees
• Profit/Loss: Proceeds minus costs

Supporting Documentation

Keep detailed records but do NOT submit them with your return unless requested by the Finanzamt:

• Transaction history from exchanges
• Wallet transaction records
• FIFO calculations
• Cost basis documentation

Tax Software

Most Germans use tax software like:

• ELSTER: Official German tax portal
• WISO Steuer: Popular German tax software with crypto support
• SteuerGo: Online tax filing with crypto integration

Example Trading Scenarios

Scenario 1: Long-Term Hold (Tax-Free)

Activity:

• February 1, 2023: Buy 2 BTC for €40,000 (€20,000 per BTC)
• March 15, 2024: Sell 2 BTC for €120,000 (€60,000 per BTC)

Calculation:

• Holding period: 13 months (> 1 year)
• Profit: €80,000
• Tax: €0 (TAX-FREE)

Scenario 2: Short-Term Trade (Taxable)

Activity:

• June 1, 2024: Buy 5 ETH for €15,000 (€3,000 per ETH)
• November 1, 2024: Sell 5 ETH for €22,500 (€4,500 per ETH)

Calculation:

• Holding period: 5 months (≤ 1 year)
• Profit: €7,500
• Exceeds €600 exemption
• Taxable profit: €7,500

Tax owed (42% marginal rate): €7,500 × 42% = €3,150

Scenario 3: Mixed Holding Periods (FIFO)

Purchases:

• Jan 1, 2023: Buy 1 BTC for €20,000
• Jan 1, 2024: Buy 1 BTC for €35,000
• Jul 1, 2024: Buy 1 BTC for €45,000

Sale: March 1, 2024, sell 2 BTC for €50,000 each (€100,000 total)

FIFO calculation:

• First BTC (Jan 2023): Held 14 months → Tax-free
• Second BTC (Jan 2024): Held 2 months → Taxable

Taxable profit:

• Proceeds for 2nd BTC: €50,000
• Cost basis: €35,000
• Taxable: €15,000

Scenario 4: Crypto-to-Crypto Under €600

Activity:

• September 1, 2024: Buy 2 ETH for €6,000 (€3,000 per ETH)
• October 15, 2024: Trade 2 ETH for 0.1 BTC when ETH = €3,200

Calculation:

• Proceeds: 2 ETH × €3,200 = €6,400
• Cost basis: €6,000
• Profit: €400
• Holding period: 45 days (≤ 1 year)

Result: Profit of €400 is under €600 exemption → Tax-free

Scenario 5: Loss Offsetting

Activity:

• Trade 1: €10,000 profit (held 6 months)
• Trade 2: €3,000 loss (held 4 months)

Calculation:

• Net profit: €10,000 - €3,000 = €7,000
• Exceeds €600 exemption
• Taxable profit: €7,000

Record Keeping Requirements

The Finanzamt requires you to keep records for at least 6 years (some sources recommend 10 years for investment assets).

What to Track

• Date and time of each transaction
• Type of transaction (buy, sell, trade, swap)
• Amount of cryptocurrency
• Value in EUR at time of transaction
• Exchange or wallet used
• Transaction fees (add to cost basis)
• Wallet addresses (for on-chain transactions)
• FIFO calculations for each disposal
• Holding period for each parcel

How to Track

1. Crypto tax software: Koinly, CoinTracker, CryptoTaxCalculator, Accointing (all support German tax reports)
2. Spreadsheet: Track purchases, FIFO, and disposals manually
3. Exchange records: Download complete transaction history
4. Blockchain explorers: Etherscan, Blockchain.com for on-chain transactions

Common Mistakes to Avoid

1. Selling just before 1-year mark: Waiting one more day can save thousands in taxes
2. Not reporting crypto-to-crypto trades: All crypto swaps are taxable disposals (if ≤ 1 year)
3. Misunderstanding the €600 exemption: It's a threshold (Freigrenze), not an allowance - exceeding it makes the entire amount taxable
4. Using LIFO instead of FIFO: German law requires FIFO method
5. Not tracking acquisition dates: Critical for determining 1-year holding period
6. Claiming long-term losses: Losses on crypto held > 1 year cannot be deducted
7. Poor record keeping: Finanzamt can request detailed documentation
8. Not converting foreign currency correctly: Must use EUR exchange rate at time of transaction

Special Situations

Staking and Lending

Important exception: If you stake or lend crypto, the holding period for tax-free treatment extends to 10 years (not 1 year).

• Stake/lend crypto = 10-year holding period for original crypto
• Staking rewards = separate 1-year holding period (or taxed as income if not held)

This makes staking less tax-efficient in Germany. See our Germany Staking Tax Guide for details.

Professional Trading (Business Income)

If crypto trading is your profession (Gewerbebetrieb), profits may be classified as business income rather than private sales:

• No 1-year tax-free rule
• All profits taxed as business income
• Can deduct business expenses
• Subject to trade tax (Gewerbesteuer)

Most individuals qualify as private investors, not professional traders.

FAQs

Is crypto really tax-free after 1 year?

Yes. If you hold cryptocurrency for more than 1 year, all gains are completely tax-free in Germany. This is one of the best crypto tax treatments globally.

What exactly is the €600 exemption?

If your total profits from all private sales transactions (crypto, gold, art, etc.) are €600 or less per year, they're tax-free. If profits exceed €600, the entire amount (not just the excess) becomes taxable.

Can I use LIFO or specific identification?

No. German tax law requires the FIFO method (First-In, First-Out). You must dispose of the oldest crypto units first.

Do I pay tax on crypto-to-crypto trades?

Yes, if you held the disposed crypto for 1 year or less. Crypto-to-crypto trades are taxable disposals. However, if you held for more than 1 year, the trade is tax-free.

What if I only bought crypto and didn't sell?

You don't owe any tax. Simply buying and holding crypto does not trigger taxable events. Tax only applies when you dispose (sell, trade, or use) crypto held for 1 year or less.

Can I claim losses on crypto I've held for more than 1 year?

No. Since long-term gains (> 1 year) are tax-free, long-term losses are not deductible. Only losses from crypto held for 1 year or less can offset taxable gains.

Do I need to report tax-free long-term sales?

Technically, yes. Even though long-term sales are tax-free, you should document them in case the Finanzamt inquires. However, they typically don't need to be explicitly reported on your tax return if there's no taxable gain.

What if I staked my crypto?

Staking extends the holding period to 10 years for the original crypto (not 1 year). This makes staking significantly less tax-efficient in Germany. See our Staking Tax Guide for details.

Tools and Resources

Crypto Tax Software

• Koinly - Excellent German tax reports with FIFO and 1-year rule
• Accointing - German-founded, strong local tax support
• CoinTracker - Good portfolio tracking with German tax features
• CryptoTaxCalculator - Supports German FIFO calculations

German Tax Software

• ELSTER - Official German tax portal
• WISO Steuer - Popular tax software with crypto support
• SteuerGo - Online tax filing
• Taxfix - Mobile-first tax filing

Official Resources

• Bundesministerium der Finanzen (Federal Ministry of Finance)
• §23 EStG (Income Tax Act)

Final Thoughts

Germany has one of the most favorable crypto tax systems in the world for long-term holders. The key principles are:

• Hold for more than 1 year = completely tax-free (best benefit)
• €600 exemption for short-term trading profits (threshold, not allowance)
• FIFO method required for cost basis and holding period
• Short-term profits (≤ 1 year) taxed at income tax rates (0-45% + solidarity + church tax)
• Report on Anlage SO (Other Income)

The 1-year tax-free rule makes Germany one of the best jurisdictions for crypto investors who can hold long-term. A German taxpayer in the 45% bracket pays €0 tax on crypto held for 13 months, while a US taxpayer would pay 20% long-term capital gains tax on the same gain.

However, the staking 10-year rule is a major drawback. Staking crypto extends the holding period from 1 year to 10 years, making staking very tax-inefficient for German residents.

Strategic planning around the 1-year mark is crucial. Selling at 11 months can result in significant taxes, while waiting until 13 months results in zero tax. Use crypto tax software with German FIFO support to accurately track holding periods and optimize your tax position.