MSTR Cat

Crypto Law/Level VIII · Around the world/8.2 Europe/Lesson 3

Germany

Germany supervises crypto firms through BaFin under MiCA, but taxes private holders under its general rule for private sales: gains are tax-free after one year, while the burden of proof keeps rising.

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. Hold each lot more than one year and its sale is outside German income tax, whatever the amount (section 23(1) sentence 1 no. 2 EStG). Catch: the Finance Ministry’s letter of 6 March 2025 requires wallet-by-wallet proof of acquisition dates and prices.
  2. Staking or lending your coins does not stretch the holding period to ten years, as the 2025 Finance Ministry letter confirms. Catch: the rewards are other income under section 22 no. 3 EStG, tax-free only if the year’s total stays below EUR 256.
  3. Short-term private-sale gains stay tax-free if the year’s total is below EUR 1,000, in force since 2024. Catch: it is a Freigrenze, not an allowance, so exceeding it by one euro makes the whole amount taxable.
  4. Time short-term losses against short-term gains in the same or later years, because losses from private sales offset only private-sale gains. Catch: swapping one coin for another counts as a sale, so active swapping inside a year creates taxable gains.
  5. Platforms report your yearly activity to the Federal Central Tax Office by 31 July under the KStTG, first in 2027 for 2026. Catch: this reporting does not replace your own declaration of taxable private sales.

MaterialsSection 23 of the Income Tax Act (EStG), private sales, on gesetze-im-internet.deThe Federal Finance Ministry’s letter of 6 March 2025 on income tax and crypto-assets (BMF-Schreiben)Federal Fiscal Court judgment IX R 3/22 of 14 February 2023A wallet-by-wallet record of purchase dates and prices for your own holdings

Wonder

  1. Is it true that crypto held for more than a year is tax-free in Germany?
  2. Does staking or lending my coins stretch the holding period to ten years?
  3. What does the German tax office expect me to be able to prove?

Explore

  1. On regulation, Germany follows MiCA (lesson 8.2.1). The Kryptomärkteaufsichtsgesetz (KMAG), enacted as Article 2 of the Finanzmarktdigitalisierungsgesetz of 27 December 2024 and in force from 30 December 2024, makes BaFin the competent authority and gives it MiCA powers. Germany chose a 12-month transitional period, so firms relying on the old national rules had to be authorised by the end of 2025, six months earlier than the EU maximum. Separately, the Electronic Securities Act (eWpG) of 3 June 2021, in force from 10 June 2021, allows bonds and some fund units to be issued as ‘crypto securities’ recorded on a register instead of paper certificates; these remain securities, not MiCA crypto-assets.
  2. German taxation is where the country stands out. For a private individual, selling crypto is a ‘private sale’ under section 23(1) sentence 1 no. 2 EStG, which covers assets other than land sold within one year of acquisition. After more than a year, the gain is outside income tax entirely, whatever the amount. The Federal Fiscal Court (BFH) confirmed in IX R 3/22 of 14 February 2023 that currency tokens such as bitcoin, ether and monero are ‘other assets’ under this rule, upholding tax on a 2017 gain of about EUR 3.4 million and rejecting the claim of an unconstitutional enforcement deficit. Gains within a year are taxed at the individual’s marginal rate.
  3. Two details catch people. First, section 23(3) sentence 5 sets a Freigrenze, not an allowance: gains from private sales stay tax-free only if the year’s total is below EUR 1,000. That figure rose from EUR 600 from 2024 under the Wachstumschancengesetz of 27 March 2024. Exceed it by one euro and the whole gain is taxable. Second, losses from private sales may only be set against gains from private sales, not against salary or other income. Swapping one coin for another counts as a sale of the first coin, so an active trader can create taxable short-term gains without ever cashing out to euros.
  4. Section 23(1) sentence 1 no. 2 also contains a ten-year period for assets used to generate income in at least one calendar year. The Finance Ministry’s letter of 6 March 2025, which replaced its letter of 10 May 2022, keeps the earlier position that staking or lending crypto does not trigger the ten-year period, so the one-year rule still applies. Rewards are a different question: staking and similar rewards are generally ‘other income’ under section 22 no. 3 EStG, which is tax-free only if the year’s total is under EUR 256, again a Freigrenze. The 2025 letter lets holders treat passive staking rewards as received when claimed, and at the latest on 31 December.
  5. The 2025 letter’s main change is stricter documentation. It sets out cooperation and record-keeping duties: taxpayers must be able to show acquisition dates and prices, wallet-by-wallet movements and the data behind any tax-software report. Advisers note that the tax office will not simply accept every software report, although an estimate may not be used to penalise taxpayers. Reporting by platforms is also arriving. Germany transposed DAC8 (lesson 8.2.2) through the Kryptowerte-Steuertransparenz-Gesetz of 22 December 2025, under which providers report customers’ yearly crypto activity to the Federal Central Tax Office by 31 July, first in 2027 for the year 2026.
  6. The state itself has faced crypto-volatility choices. Between June and July 2024 Saxony sold about 50,000 bitcoin seized in the movie2k piracy case, raising about EUR 2.6 billion through an ‘emergency sale’ that the Code of Criminal Procedure allows when seized property risks a substantial loss of value. A money-laundering trial before the Leipzig Regional Court opened in February 2026, and ZDF reported that victims’ claims come first and the final allocation may take years. A practical check for a German resident: for each lot, record the purchase date, price and wallet, and before any sale or swap note whether that lot has been held for more than one year.

Key facts

  • Under section 23(1) sentence 1 no. 2 EStG, a private sale of crypto held for more than one year is outside German income tax.
  • The BFH held in IX R 3/22 of 14 February 2023 that bitcoin, ether and monero can be the subject of a taxable private sale.
  • Private-sale gains are tax-free only if the year’s total is below EUR 1,000, a Freigrenze in force since 2024.
  • The Finance Ministry’s letter of 6 March 2025 replaced the 10 May 2022 letter and keeps the one-year period for staked or lent crypto.
  • Other income such as many staking rewards is tax-free under section 22 no. 3 EStG only if it totals less than EUR 256 in the year.
  • Under the KStTG, crypto service providers must report to the Federal Central Tax Office by 31 July for the previous calendar year.

Exercise nine, six, three, one

9CollectList up to 9 crypto lots or reward streams you hold or have held while resident in Germany, with purchase date, price and wallet.
6ClusterSort them into 6 groups: held over a year, held under a year, swapped into other coins, staking or lending rewards, lots with missing records, and lots on platforms that will report under DAC8.
3DistillReduce the 6 to 3: the lots or rewards most likely to produce a taxable result or an evidence gap.
1CrystallizeWrite 1 sentence stating what you would need to show a German tax office to support the one-year exemption on your largest holding.

Fact check

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

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