German tax knowledge

Crypto holding period in Germany: when is a sale tax-free?

In Germany, private crypto disposals are generally tax-free after a one-year holding period (section 23 (1) sentence 1 no. 2 EStG). The clock starts with the acquisition of the specific lot, not with the first time you ever bought the coin. If you use the coins to generate income, for example by staking, the German Ministry of Finance letter of 10 May 2022 may require a longer period. That view is disputed and should be checked with a tax advisor in the individual case.

FIFO or LIFO: which method applies to crypto in Germany?

For private crypto disposals in Germany, FIFO is the usual method described by the Ministry of Finance: the earliest acquired lot is treated as sold first. LIFO and moving average produce different gains and different holding periods. Without complete purchases and cost basis, no method produces a reliable result.

How are staking rewards taxed in Germany?

Under the Ministry of Finance letter of 10 May 2022, staking rewards in Germany are generally other income (section 22 no. 3 EStG), valued at market price when they accrue. That value becomes the cost basis of the new coins. Whether staking extends the holding period of the staked coins is legally disputed. What is not disputed: rewards must be booked as an inflow and kept separate from the staked inventory.

Is a crypto-to-crypto swap taxable in Germany?

Yes. Swapping one crypto asset for another is generally a disposal of the coins you give up. The gain is the market value of the coins received minus the cost basis and costs of the lot given up. The received coin takes that value as its new cost basis. If the swap is booked as a transfer or as two deposits, you create a phantom gain or a broken history.

How are airdrops and hard forks taxed in Germany?

Airdrops and hard forks in Germany are generally a taxable inflow. Under the Ministry of Finance letter of 10 May 2022 they can be other income at market value when they accrue, especially if they are granted for a service or an active act. That value is the cost basis. If the token is later sold with cost basis zero, the gain is inflated.

How is crypto lending interest taxed in Germany?

Interest and rewards from lending crypto are generally income in Germany when they accrue, often as other income. The lent inventory itself is not a sale if you remain the beneficial owner. The interest coins take market value as cost basis. Mixing loan, interest and repayment creates fake sales or cost basis zero.

How is liquidity mining taxed in Germany?

Liquidity mining is usually several events: handing over two coins, receiving an LP token, ongoing fees or rewards, later the withdrawal. Each step can be an exchange or an inflow. Booking only “LP in” and “LP out” as transfers loses cost basis and holding period. Valuation follows the economic substance, not the pool name.

Are transfers between your own wallets taxable?

No. A transfer between your own wallets or exchange accounts is not a disposal if you remain the beneficial owner. Holding period and cost basis travel with the coins. If the counterpart is missing, the software often treats the withdrawal as a sale and the later deposit as an inflow with no origin. That creates a phantom gain and a broken balance.

What is cost basis — and why must it not be zero?

Cost basis is what the sold lot cost you: purchase price plus incidental acquisition costs, or market value for a swap, reward or airdrop. If that value is missing, many tools assume zero. Then the entire sale proceeds become the gain. That is the most common reason for a tax bill that is far too high — not the tax rate.

What must a crypto tax report contain for the tax office?

A reviewable report shows for every disposal: asset, amount, acquisition date, cost basis, disposal date, proceeds, gain or loss, and whether the holding period applies. Plus a closed inventory with no lasting negative balances. A PDF with warnings, cost basis zero or unclassified DeFi is a number — not an explanation.

What is the German crypto tax-free threshold?

Private crypto disposal gains fall under the section 23 (3) EStG threshold. Since 2024 it is €1,000 per calendar year, until 2023 it was €600. It is a threshold, not an allowance: exceed it and the entire yearly gain is taxable. Gains after the one-year holding period do not count toward it.

How are crypto gains taxed in Austria?

Since the 2022 eco-social tax reform, crypto income in Austria is generally capital income (section 27b EStG), typically at 27.5%. The German one-year holding period does not apply. Cost basis usually follows a moving average, not FIFO.