In Germany, crypto that is held for less than one year and any additional income from crypto is subject to Income Tax. The tax you will pay is the same as your regular Income Tax rate. If you hold your crypto for more than a year though, you'll pay no tax on your crypto gains!
Crypto Tax in Germany
Crypto is viewed as a private asset in Germany, unlike in many other countries where it is viewed as property. This means that crypto has an individual Income Tax, but only in certain circumstance.
If you've held your crypto for less than a year, you will pay income tax on any profits that you made when it was disposed of, unless your net gain in profits is less than €600.
Instance which would qualify as a disposal of crypto include:
Trading crypto to crypto.
Purchasing good or services with your crypto.
If you hold your crypto for over a year in Germany, your gains are tax free when you dispose of the crypto, so it pays to hold.
In addition to this, you'll need to pay Income Tax on crypto transactions considered income, such as staking and mining transactions.
Income Tax Rate in Germany
German Income Tax rates for 2023 are:
€0 to €10,632
€0 to €21,264
€10,632 to €61,971
€21,264 to €123,942
14% to 42%
€61,971 to €277,825
€123,942 to €555,650
Crypto Losses in Germany
In Germany, you can offset your crypto gains with losses to reduce your total tax liability. In the case that there are no profits to offset, the losses can be carried forward to future financial years to offset future gains, if they are reported on the the tax return.
Tax Free Crypto in Germany
In Germany, you won't be taxed on crypto profits in these situations:
You sell, trade, or spend your crypto after owning if for more than one year.
The net-gain from short-term investments (less than one year) is less than €600 for the financial year.
You earn less than €256 in additional income from crypto.
Transferring crypto between wallets or exchange accounts of your own ownership.
Buying crypto with fiat.
Gifting crypto (under €20k).
As you can see, Germany is one of the most crypto friendly countries!