The Cornerstone of German Crypto Investing: §23 EStG
At its essence, the one-year rule is straightforward. Any profit below €1000 that results from the sale of a cryptocurrency held as a private asset for more than a year (365+ days) is tax-exempt.
Contrastingly, unless there’s a unique case-specific exception, if the sale takes place within a year of the acquisition, the profits from private sales count toward your taxable income.
Example:
January 15, 2023: You buy 1 ETH for €1,500.
January 20, 2024: You sell that same 1 ETH for €3,500 (371 days later).
Result: Your €2,000 gain is tax-free under §23 EStG.
This rule applies to major cryptocurrencies (Bitcoin, Ethereum, Cardano, etc.) sold as single assets and not as part of a commercial trading operation.
Must-Know Nuances: What Resets the Clock?
The one-year rule is simple, but applying it requires an ant-like level of diligence.
Converting
Converting one cryptocurrency to another or swapping crypto for goods/services is a disposal (a taxable sale).
What about swaps/trades made below the one-year limit, with the asset later increasing in value? In such cases, you've got a taxable gain even though you never converted into euros. The holding period on the new coin begins on the day of the trade following the swap.
Rewards
Ironically, unlike the "10-year rule" myth, winnings from staking, lending, most airdrops, or other cryptocurrency rewards tend to incur income tax, but this usually depends on the circumstances. The market value when you receive those reward coins becomes their cost of acquisition (cost basis) for any future disposal.
Incidentally, Germany doesn’t have an overall 10-year holding period that imposes zero crypto taxes upon selling the assets. The BMF's updated guidance provides valuation on receipt and allocation rules for forks/airdrops.
Staking/Forking/Airdrop Rewards
If you receive rewards (staking, airdrop, fork), take a picture of the market value and date/time stamp upon receipt, as the government will treat the value as income and use it as the cost basis for future gains/losses. The BMF guidance specifically requires open valuation and documentation.
Private Sales Relief Limit
As of the 2024 tax year, the relief limit on private sales has increased to €1,000 for a calendar year (previously €600). As long as your total private sales profits in a calendar year are below that, they are not taxable; above it, the entire amount is taxable (not the excess).
Records, records, records
Tax practitioners usually say that FIFO is the most frequently recommended method for most individual taxpayers. That said, the key thing is to choose and consistently apply a recording method (specific identification where feasible, or average cost based on asset and wallet) and keep records to prove it. Don't rely on anecdotal assumptions; record what approach you take per wallet/asset.
Understanding the one-year rule is one thing — documenting and applying it correctly is another. That’s where 8lends comes in. The company helps investors and businesses alike bring order to complex regulatory data through its expertise in compliance, governance, and reporting frameworks. Whether it’s aligning crypto transactions with tax law or managing enterprise-wide audit trails, 8lends makes clarity the standard, not the exception.
Strategic Patience: How to Plan Your Way to Tax-Free Cryptocurrency Gains in Germany
Having the law in hand is one thing; creating a strategy with it is a whole different animal. But with the proven-to-work tips below, securing that bag will be a cinch:
- If you're a HODLer, stack and hold for more than 365 days, and you can sell tax-free (for personal property).
- If you are actively trading, divide your portfolio into a long-term bucket (to satisfy the one-year rule) and a trading bucket (accept taxable results and document everything).
- If an asset is nearing its first anniversary, a couple of weeks' delay may convert a taxable sale into a tax-free one, so keep meticulous timestamp records.
Practical Steps: Your Tax-Saving Action Plan
If you’re a “hit the ground running” type of person, experiment with these tips:
- Use good cryptocurrency tax software to reconcile transactions, compute gains/losses, and see which disposals meet the one-year test. The best software also has tools that can generate the documentation the tax office needs.
- Have separate intent buckets: Are you daily trading and HODLing for long-term gains? Either way, try not to commingle your one-year contenders with traded coins.
- Keep receipts for staking/airdrops: Store timestamps and market values at receipt; that value is taxed at receipt and constitutes cost basis for later sales.
- Choose and keep an accounting method: FIFO is common and emphasized in guidelines; whatever you choose, apply it consistently and keep it.
- Seek a tax advisor (Steuerberater) in case of doubt: If you have an elaborate DeFi strategy or are near thresholds, a tax advisor with intimate knowledge of Germany’s crypto taxation landscape is worth the money.
Common Crypto Taxation Mistakes to Avoid (and How to Fix Them)
If you only take away a few things from this article, let these costly mistakes be what sticks in your mind:
- Moving cryptos between exchanges without exporting histories can lead to missing data. The solution? Periodically export CSV files from each wallet and maintain a backup.
- Disposing of ETH→ADA or BTC→USDT is taxed. Be as careful with exchanges as you would with sales.
- Payment tokens are no longer subject to the infamous "10-year rule" for staking. In contrast to zero-basis assets, rewards are taxable at the time of receipt.
- Gains under €1,000 from all private transactions in a calendar year are tax-free starting in 2024. However, if you go above that limit, the full gain is subject to taxes.
- The generous one-year rule only applies if your cryptocurrency is a private asset. Some activity can amount to commercial trading for certain investors, and the tax office can use that to turn the tables and claim taxes.
Conclusion: Tax Freedom Through Discipline
Germany’s one-year rule favors disciplined HODLing, but only if you masterfully apply the rules. In parting, remember that staking/lending rewards are taxable (based on your cost basis). Good documentation makes a world of difference, and the tax exemption for private sales is currently €1,000 annually (from the 2024 tax year).
With solid records and the various ideas we’ve highlighted, your crypto portfolio can remain tax-efficient, but don't count on myths such as a default 10-year rule or a €0 cost basis for crypto rewards. Let structure replace uncertainty — and let compliance work for you, not against you.
Germany’s one-year rule rewards organization and foresight — two traits at the core of 8lends’ philosophy. If you’re ready to simplify how your tax documentation, governance, or digital-asset reporting aligns with regulation, 8lends is your best partner.
