What are the German tax rules for cryptocurrency?

Germany treats cryptocurrencies as private assets (Wirtschaftsgut) rather than currency or securities. Gains from selling, swapping, or spending crypto are treated as private sales transactions under §23 EStG and are subject to income tax at your personal marginal rate, not at the flat Abgeltungsteuer rate.

The critical holding period rule: if you hold crypto for more than one year, any gain on disposal is completely tax-free. If you hold for one year or less, the gain is taxable. A swap between two cryptocurrencies (e.g. Bitcoin to Ethereum) counts as a taxable disposal of the first coin. The one-year clock restarts for each purchase. If you earned crypto through staking, lending, or mining, some tax authorities previously argued this extends the holding period to 10 years, but the BMF clarified in 2022 that simple staking income does not extend the holding period of the underlying coins to 10 years; however, the staking rewards themselves are taxed as income when received.

There is an annual Freigrenze (threshold, not an allowance) of €600 for private sales gains under §23. If your total private sales gains for the year across all assets stay below €600, no tax is owed on any of it. If you exceed €600, the full amount is taxable. Losses from crypto can only be offset against other private sales gains, not against employment income. Maintaining detailed records of all transactions, including dates, amounts, exchange rates, and wallet addresses, is essential for correct tax reporting.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.