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Crypto Law/Level VII · Loopholes worth understanding/7.2 Residency and borders/Lesson 5

Holding-period exemptions: Germany and Portugal

How two European countries exempt crypto held for a year, the exact wording that decides it, and the conditions that undo the exemption.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Resident in Germany, sell privately held coins more than one year after buying and the gain is tax-free under §23(1) no. 2 EStG; the catch is genuine German residence and proof of each unit’s purchase date.
  2. For German sales within a year, keep total private-sale gains for the calendar year below €1,000 and they stay tax-free under §23 EStG; reaching €1,000 makes the whole amount taxable, not just the excess.
  3. Resident in Portugal, gains on crypto held 365 days or more are excluded under article 10 of the IRS Code, and crypto-for-crypto swaps are not taxed when made; shorter holdings pay a flat 28% under article 72.
  4. Portugal’s exclusion fails where you or the payer are outside the EU, EEA or a treaty or information-exchange jurisdiction, so use platforms located there; losing Portuguese residence is treated as an onerous disposal.
  5. Before staking or lending in Germany, check the Finance Ministry letter of 6 March 2025 on whether earning income extends the holding period to ten years; US citizens in either country still owe US tax on the gain.

Materials§23 of the German Income Tax Act (EStG) on gesetze-im-internet.deArticles 10 and 72 of the Portuguese IRS Code on the Portal das FinançasPurchase and sale records showing the date each coin was acquired

Wonder

  1. Is it true that crypto held for a year is tax-free in Germany?
  2. How does Portugal’s 365-day rule work?
  3. What can make the exemption disappear?

Explore

  1. Some countries do not tax gains on privately held crypto that has been kept long enough. This is different from the US system, where holding longer than a year lowers the rate but does not remove the tax (lessons 2.3.2 and 7.1.1). Germany and Portugal are the best-known European examples. Both rules depend on being tax resident in that country when the coin is sold. In Germany, people with a home or habitual abode in the country are fully liable to income tax under §1 of the Income Tax Act (EStG). Each rule also has precise conditions.
  2. In Germany, crypto held as private property falls under the rules for ‘private sale transactions’ in §23 EStG. Section 23(1) no. 2 taxes sales of assets where no more than one year passes between acquisition and sale. A coin sold more than a year after it was bought is therefore outside the rule and not taxed as a private sale. The Federal Ministry of Finance set out the tax administration’s view on crypto in a letter of 6 March 2025, ‘Einzelfragen zur ertragsteuerrechtlichen Behandlung bestimmter Kryptowerte’. Coins held in a business are treated differently.
  3. Germany’s catches are in the wording. Gains stay tax-free only if total private sale gains for the calendar year are less than €1,000. This is a threshold, not an allowance: once total gains reach €1,000, all of them are taxable, not just the excess. Losses from private sales can be set off only against gains from private sales. The statute also extends the one-year period to ten years for assets that were used to earn income in at least one calendar year. How that applies to coins used for staking or lending is a question the Ministry’s letter addresses.
  4. Portugal began taxing crypto gains under Law 24-D/2022 of 30 December 2022. Article 10(1)(k) of the IRS Code taxes the onerous disposal of crypto-assets that are not securities, and article 72 taxes the net gain at a flat 28%. Under article 10, gains and losses on crypto-assets held for 365 days or more are excluded. When crypto is exchanged for other crypto, no tax arises at that point; the coins received take over the acquisition value of the coins given up. Unique, non-fungible crypto-assets are excluded from the definition of crypto-asset.
  5. Portugal’s catches are also in the wording. The 365-day exclusion and the crypto-for-crypto rule do not apply where the taxpayer, or the person paying, is not resident in an EU or EEA state or in a jurisdiction with a tax treaty or an information-exchange agreement with Portugal. Losing Portuguese tax residence is treated as an onerous disposal, which can tax gains on departure (lesson 7.2.4). Decree-Law 97/2026 of 20 May 2026 renumbered parts of article 10, so older guides may cite different paragraph numbers. For a US citizen in either country, the US still taxes the gain (lesson 7.2.1).
  6. A practical check: for each coin, record the exact purchase date, price, platform and the date of any move between wallets, so that the holding period can be proved for each unit. Add up all private sale gains for the year and see how close the total is to Germany’s €1,000 threshold, or note which disposals fall within 365 days for Portugal. Check whether any platform or counterparty sits outside the EU, EEA or a treaty country. This lesson explains how the exemptions work; it does not recommend moving. Rules change, so read the current statute text before relying on it.

Key facts

  • Under §23(1) no. 2 EStG, Germany taxes private sales of assets where no more than one year passes between acquisition and sale.
  • Germany’s €1,000 limit for private sale gains is a threshold: if total gains for the year reach €1,000, all of them are taxable.
  • Germany’s Federal Ministry of Finance issued a letter on the income tax treatment of crypto-assets on 6 March 2025.
  • Portugal’s Law 24-D/2022 added the disposal of crypto-assets that are not securities to the taxable gains in article 10 of the IRS Code.
  • Portugal taxes net crypto gains at a flat 28% and excludes gains and losses on crypto-assets held for 365 days or more.
  • Portugal’s 365-day exclusion does not apply where the taxpayer or the payer is not resident in the EU, the EEA or a treaty or information-exchange jurisdiction.

Exercise nine, six, three, one

9CollectList up to 9 coins or disposals from a real or imagined year, with the date bought, date sold and the platform used.
6ClusterSort them into 6 groups: held over a year, held under a year, crypto-for-crypto swaps, disposals through non-EU platforms, staked or lent coins and records still missing.
3DistillReduce the 6 to 3: which groups would decide whether an exemption applies?
1CrystallizeWrite 1 sentence explaining why Germany’s €1,000 threshold is not the same as a €1,000 allowance.

Fact check

Dates, figures and claims checked against the published sources listed below.

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