Germany is one of the most favourable countries in the world for long-term crypto holders. Thanks to the 1-year rule, you can cash out your Bitcoin, ETH, or altcoins completely tax-free if you’ve held them long enough.
But there are traps: short-term trades, staking, and lending all complicate things. Let’s break it down 👇
🔎 How Germany Classifies Crypto
- Crypto is considered private money/other assets under German tax law (not a security or currency).
- That means gains are taxed under private sale transactions (private Veräußerungsgeschäfte).
💰 The Famous 1-Year Rule
- If you hold crypto > 1 year, gains are 100% tax-free 🎉.
- If you sell within 1 year, gains are taxable if they exceed €600 in total for the year.
Example:
- Buy 1 BTC at €20,000.
- Sell 14 months later for €40,000.
- Profit = €20,000 → completely tax-free.
👉 This makes Germany a HODLer’s paradise.
🧾 When Crypto Is Taxable
- Held < 1 year → gains taxable at your personal income tax rate (0–45%).
- Total annual exemption = €600. Below that, no tax.
Example:
- Buy ETH at €1,000.
- Sell for €2,200 after 8 months.
- Gain = €1,200 → taxable at your marginal rate.
⚠️ Staking, Lending & DeFi
This is where it gets tricky:
- If you stake or lend crypto, the holding period for tax-free disposal can extend to 10 years.
- That means if you earn staking rewards on your ETH, you may need to wait 10 years before selling tax-free.
- Rewards themselves are taxable as income when received.
🎨 NFTs & Other Assets
- NFTs fall under the same rules as other “private assets.”
- If sold within 1 year, taxable (if >€600). After 1 year, usually tax-free.
- Professional NFT creators may be taxed as a business.
📉 Losses
- Losses from private sales can offset gains from other private sales (crypto, gold, collectibles).
- Losses cannot offset regular employment income.
🕵️ Enforcement in 2025
- Germany participates in EU/OECD crypto-asset reporting frameworks.
- Exchanges share data with the Bundeszentralamt für Steuern (BZSt).
- Tax evasion penalties include back taxes, fines, and in extreme cases imprisonment.
🛠️ Compliance Checklist
- Track holding periods carefully (1 year vs 10 years if staking/lending).
- Keep records of all trades, wallet addresses, and euro values.
- Apply the €600 exemption properly.
- File gains/losses on your annual income tax return.
✅ Key Takeaways (Germany)
- Hold crypto >1 year = completely tax-free 💎🙌.
- Sell within 1 year = taxable if gains >€600.
- Staking/lending can extend tax-free period to 10 years.
- Rewards (staking/mining) = taxable income.
- Still need good records — the BZSt is monitoring closely.