Declaring Bitcoin in Germany: §23 EStG, 12-month threshold and Anlage SO

German bitcoin taxation rests on §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon → (Einkommensteuergesetz) : bitcoins are classified as "anderes Wirtschaftsgut" (other economic good), not as a financial asset. The consequence is unique in Europe : a disposal capital gain×Capital gain, capital lossGain (or loss) realised when disposing of an asset: the difference between sale price and acquisition cost. Tax treatment varies by country; losses can often be offset against gains of the same year.See in the lexicon → is fully exempt from tax if the holding period exceeds 12 months (Spekulationsfrist).

This rule has two operational corollaries. First, mandatory FIFO×FIFO (First In First Out)Capital gains method that treats the first bitcoins bought as the first sold. Used in Germany, Italy and the United States.See in the lexicon → in the calculation (the oldest bitcoins are sold first), a method that maximises the chances of reaching the deadline. Second, below 12 months, the capital gain becomes fully taxable at the marginal income tax rate (up to 45 % plus surcharges), with a 1 000 EUR threshold (Freigrenze, not Freibetrag : if the gain exceeds 1 000 EUR, everything is taxable, not only the fraction beyond).

This article details §23 EStG, explains the FIFO mechanics and its impact on multi-acquisition wallets, addresses the 1 000 EUR Freigrenze and its trap, describes the Anlage SO procedure (dedicated form for "other income"), covers mining×MiningProcess of validating blocks through proof of work. Consumes electricity by design : that is what secures the network.See in the lexicon → / staking×StakingLocking tokens to secure a proof-of-stake blockchain in exchange for a yield. Does not exist on Bitcoin, which relies on proof of work; tax-wise, staking income follows its own rules.See in the lexicon → cases (ordinary income, not capital gains), and lists the software tools recognised by the Finanzämter (CoinTracking, Blockpit).

§23 EStG, 12-month Spekulationsfrist and 1000 EUR Freigrenze

The German tax regime for crypto-assets rests on a piece of law written in 1934, included in the modern Tax Code as §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon →, and confirmed by the Bundesministerium der Finanzen Anwendungsschreiben of 10 May 2022 (revised 6 March 2025). Three principles structure the taxation.

Principle 1: Bitcoin is a Wirtschaftsgut (economic asset), not a currency. This excludes the Kapitalerträge regime (capital income, taxed at 25 % flat with the Abgeltungsteuer) that applies to shares, dividends and bonds. Bitcoin falls within the regime of other income (sonstige Einkünfte) under §22 Nr. 2 EStG and Privatveräußerungsgeschäfte (private disposal operations) under §23 EStG.

Principle 2: full exemption beyond 12 months of holding. This is the core of the system. The holding period starts on the acquisition day of each lot (each DCA×DCA (Dollar Cost Averaging)Buying a small fixed amount at regular intervals (for example 100 EUR a week), regardless of price. Smooths the average purchase cost and neutralises timing bias.See in the lexicon → purchase is a separate lot) and is measured day by day. If Andreas bought 0.01 BTC on 14 February 2025 and sells those 0.01 BTC on 14 February 2026 (or later), the gain is exempt. If he sells on 13 February 2026, the entire gain is taxable.

Principle 3: under the 12-month threshold, gains are taxed at the progressive scale. No flat tax. The gain adds to the overall taxable income (salary, self-employment, rental income) and is taxed at 2026 brackets: 0 % up to 11,604 EUR, then progressive up to 42 % at 66,760 EUR, and 45 % above 277,826 EUR (Reichensteuer). Add the Solidaritätszuschlag of 5.5 % on the tax owed (Soli abolished for 90 % of taxpayers since 2021 but maintained for high earners). Andreas, a developer at ~75,000 EUR gross, sits at the top of the 42 % bracket.

Freigrenze 1000 EUR. Since 1 January 2024 (previously 600 EUR), if total short gains (all sonstige Einkünfte operations cumulated over the year) stay under 1,000 EUR per filer, full exemption. Mind the word Freigrenze (hard threshold), not Freibetrag (allowance): at 1,001 EUR of cumulated gains, the entire 1,001 EUR becomes taxable, not just the 1 EUR overshoot.

Practical consequence for a DCA investor in self-custody×Self-custodyModel in which you hold your own private keys. Your bitcoins depend on no third party. This is Bitcoin's founding promise.See in the lexicon →: structure sales either to stay under 1,000 EUR per year, or to wait 12 months and 1 day on each lot. The FIFO×FIFO (First In First Out)Capital gains method that treats the first bitcoins bought as the first sold. Used in Germany, Italy and the United States.See in the lexicon → method described in the next section determines which lot is considered sold first.

Mandatory FIFO method and worked example

When an investor has made several purchases on different dates and prices (typical case of monthly DCA×DCA (Dollar Cost Averaging)Buying a small fixed amount at regular intervals (for example 100 EUR a week), regardless of price. Smooths the average purchase cost and neutralises timing bias.See in the lexicon →), a rule is needed to determine which lots are considered sold first on a partial disposal. The BMF settled this in May 2022 and confirmed in 2025: the method is mandatory FIFO×FIFO (First In First Out)Capital gains method that treats the first bitcoins bought as the first sold. Used in Germany, Italy and the United States.See in the lexicon → (First In, First Out), wallet×WalletSoftware or device that manages your Bitcoin keys and lets you sign transactions. A wallet does not really « hold » your bitcoins, it holds the keys that prove you own them.See in the lexicon → by wallet.

Germany differs here from France (CGI 150 VH bis prorata-temporis method on the whole portfolio) and from Switzerland (no gain calculation at all). The FIFO choice has two structuring implications for a DCA investor.

Implication 1: selling exhausts the oldest lots first. These lots have the longest holding duration and are therefore more likely to have crossed the 12-month threshold. This is favourable to the taxpayer in most cases (sale of old exempt BTC, retention of recent BTC that will mature).

Implication 2: wallet by wallet, not whole portfolio. If Andreas has a Sparkasse brokerage wallet (which he closed) and a BitBox×Ledger, Trezor, Coldcard, BitBoxMain hardware wallet brands. Ledger Nano S Plus / X (French, the best-seller), Trezor Model T (Czech, open source), Coldcard Mk4 (Canadian, ultra-secure, Bitcoin-only), BitBox02 (Swiss, open source).See in the lexicon → self-custody×Self-custodyModel in which you hold your own private keys. Your bitcoins depend on no third party. This is Bitcoin's founding promise.See in the lexicon → wallet, FIFO is calculated separately. Transferring BTC between wallets is not a taxable disposal, but it can complicate FIFO tracking if records are not kept rigorously.

Worked example. A female investor has accumulated 0.5 BTC over six DCA purchases:

• 15 June 2024: 0.08 BTC at 50,000 EUR/BTC (cost 4,000 EUR)
• 15 Sept. 2024: 0.08 BTC at 60,000 EUR/BTC (cost 4,800 EUR)
• 15 Dec. 2024: 0.08 BTC at 90,000 EUR/BTC (cost 7,200 EUR)
• 15 March 2025: 0.08 BTC at 85,000 EUR/BTC (cost 6,800 EUR)
• 15 June 2025: 0.09 BTC at 95,000 EUR/BTC (cost 8,550 EUR)
• 15 Sept. 2025: 0.09 BTC at 100,000 EUR/BTC (cost 9,000 EUR)

Total cost: 40,350 EUR for 0.50 BTC. On 1 August 2025, the investor sells 0.10 BTC at 105,000 EUR/BTC for proceeds of 10,500 EUR. FIFO requires attributing this sale to the oldest lots:

• 0.08 BTC from 15 June 2024 (cost 4,000 EUR, held 13 months and 17 days, exempt §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon →)
• 0.02 BTC from 15 Sept. 2024 (cost 1,200 EUR, held 10 months and 17 days, taxable)

Exempt gain: (0.08 × 105,000) - 4,000 = 4,400 EUR (out of scope, not declared as taxable).

Taxable gain: (0.02 × 105,000) - 1,200 = 900 EUR (to report on Anlage SO).

As 900 EUR < 1,000 EUR Freigrenze, and provided this is the only short gain of the year, full exemption also applies on this tranche. If she sold 0.11 BTC at the same price, the taxable fraction would rise to 0.03 BTC for ~1,350 EUR of short gain, tipping the whole over the Freigrenze and taxing 1,350 EUR at the scale (potentially ~570 EUR of tax at 42 % + Soli for Andreas).

Optimised sale strategy around the 12-month threshold

The §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon → threshold is strict: 12 months day for day. Selling at 11 months and 28 days triggers full taxation at the scale. Selling at 12 months and 1 day exempts completely. Four principles guide an optimised sale strategy for a DCA×DCA (Dollar Cost Averaging)Buying a small fixed amount at regular intervals (for example 100 EUR a week), regardless of price. Smooths the average purchase cost and neutralises timing bias.See in the lexicon → investor in self-custody×Self-custodyModel in which you hold your own private keys. Your bitcoins depend on no third party. This is Bitcoin's founding promise.See in the lexicon →.

Principle 1: keep a lot journal with precise dates. Each DCA purchase is timestamped by the origin platform (Bitvavo, Coinbase, Kraken, banking broker×BrokerIntermediary that sells bitcoins to an end customer at a fixed price, with no visible order book. Coinhouse, Bull Bitcoin and Pocket Bitcoin are brokers.See in the lexicon →). Keep monthly CSV exports and calculate ahead the exemption date of each lot. For a purchase on 15 June 2025, exemption from 16 June 2026 onwards. Free tools: Excel or Numbers spreadsheet; paid tools: Koinly (49 EUR/year), CoinTracking (130 EUR/year), Blockpit (199 EUR/year), all three compatible with ELSTER and with a German FIFO×FIFO (First In First Out)Capital gains method that treats the first bitcoins bought as the first sold. Used in Germany, Italy and the United States.See in the lexicon → tax report included.

Principle 2: prioritise sales on lots > 12 months. If the goal is to sell 0.2 BTC in 2026, first check how many BTC have crossed the threshold. If 0.3 BTC are already past 12 months, the operation is fully exempt. If only 0.15 BTC are eligible, wait a few months or accept a taxable fraction.

Principle 3: schedule sales early in the tax period to capture the Freigrenze. The 1,000 EUR Freigrenze refreshes each calendar year. An investor wanting to take out 5,000 EUR of short gain on recent lots can spread it: 900 EUR in December 2025, 900 EUR in January 2026, 900 EUR in January 2027, and so on. Five consecutive years under the 1,000 EUR threshold remove the tax on 4,500 EUR of gains that would otherwise be taxed at ~42 %, saving ~1,900 EUR.

Principle 4: avoid hidden triggers. Some operations count as taxable disposals without a visible fiat×Fiat (fiat currency)State currency with legal tender status (euro, Swiss franc, dollar), issued by a central bank and not backed by a physical asset. By contrast, Bitcoin has an issuance capped at 21 million units, with no central issuer.See in the lexicon → sale: (a) exchanging BTC against another crypto (USDT, ETH, etc.) is a taxable disposal at the BTC/EUR rate of the day, (b) paying in BTC for a good or service (buying a coffee at a Bitcoin merchant) is a taxable disposal, (c) lending may, depending on BMF doctrine 2025, interrupt or not the Spekulationsfrist (oscillating position, to confirm if in doubt). The simple wallet×WalletSoftware or device that manages your Bitcoin keys and lets you sign transactions. A wallet does not really « hold » your bitcoins, it holds the keys that prove you own them.See in the lexicon →-to-wallet transfer of the same holder triggers nothing.

The Andreas case illustrates the maximum strategy. All his DCA lots since 2020 are over 12 months in 2026. He can sell the entire 0.8 BTC in June 2026, declare informatively on Anlage SO, and pay 0 EUR tax on the 62,000 EUR gain. Direct comparison: Marc, French resident from 2027, would pay 18,600 EUR PFU×PFU (Prélèvement Forfaitaire Unique)French 30 percent tax on capital gains, including crypto gains. Also called the « flat tax ». Made up of 12.8 percent income tax and 17.2 percent social levies.See in the lexicon → on the same gain (30 % of 62,000). Sharp difference: 18,600 EUR. That is the order of magnitude of the German advantage for whoever can wait 12 months.

5 practical cases: HODL, short sale, lending, mining, Wegzug

The table below condenses the German tax treatment of five common situations for a German resident retail investor in 2026. Amounts are indicative and exclude full personal situation (other income, spouse, children). All calculations assume a marginal bracket of 42 % plus Soli 5.5 % (Soli applied only if taxable income > 73,000 EUR for single in 2026).

Comments. The HODL > 12 months case shows the central advantage of the German regime: 0 EUR tax on 62,000 EUR of gain, a unique situation in Western Europe. The short sale case shows the effect of the progressive scale: ~44 % effective taxation (42 % + Soli) if overall income places it in that bracket. Lending is taxed at the progressive scale as « other income » §22 Nr. 3 EStG, so treated fiscally like activity interest, not as Kapitalerträge at 25 % flat.

Solo Bitcoin mining (which presumes a Bitcoin node×NodeComputer that runs the Bitcoin software and takes part in the network by validating blocks and transactions. A « full node » keeps a complete copy of the blockchain.See in the lexicon → with non-trivial hashrate×HashrateTotal computing power deployed by miners, measured in hashes per second (EH/s, exahashes). The higher the hashrate, the more expensive the network is to attack.See in the lexicon →, a rare situation for a retail investor in 2026) is treated either as activity income §15 EStG if the activity is regular (commercial mining, Gewerbe), or as other income §22 EStG if occasional. The Wegzug §6 AStG case is the most complex: it applies to a taxpayer holding more than 1 % of a for-profit company, which does not concern pure Bitcoin (not a corporate share). But the BMF doctrine 2025 does not definitively settle BTC held through a personal GmbH (holding structure). In case of doubt, tax adviser consultation before departure.

A final note: these five cases are independent. Andreas, who only HODLs and sells after 12 months, pays nothing. A more active investor combining lending plus short sales plus occasional mining adds up taxations on each line and loses the §23 EStG advantage by cumulation. The German regime rewards pure patience.

Anlage SO, ESt 1 A forms and declaration calendar via ELSTER

The German tax declaration is mandatorily filed electronically via the ELSTER portal (Elektronische Steuererklärung) of the Finanzamt since 2017. No paper version accepted for self-employed or taxpayers with mixed income. ELSTER is free, in German only, and requires a digital certificate (Zertifikatsdatei .pfx) downloaded after portal registration.

Three forms to know for Bitcoin.

ESt 1 A (Mantelbogen). Main income tax return form. Taxpayer identity, family situation, dependents. The main form serves as envelope to all annexes.

Anlage SO (Sonstige Einkünfte). « Other income » annex. Page 2, « Private Veräußerungsgeschäfte (§ 23 EStG) » section. Lines 41 to 47 to report each taxable disposal (disposal within 12 months). Columns: acquisition date, sale date, acquisition price, sale price, gain. One line per taxable disposal. If all year sales are beyond 12 months and exempt, the taxpayer can either declare nothing, or add an informational mention on line 41 « 0 EUR Veräußerungsgewinn after expiry of the Spekulationsfrist under §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon → ».

Anlage G (Einkünfte aus Gewerbebetrieb). « Commercial activity income » annex. Used if the investor has tipped into gewerblicher Händler (case excluded for the retail investor in normal private management). Commercial Bitcoin mining×MiningProcess of validating blocks through proof of work. Consumes electricity by design : that is what secures the network.See in the lexicon → declared here if regular activity. Opens the Gewerbesteuer (communal commercial tax, average rate 14 %, allowance 24,500 EUR).

Declaration calendar 2026. The 2025 income tax return must be filed via ELSTER before 31 July 2026 for a taxpayer without Steuerberater (tax adviser). With a Steuerberater, deadline extended to 28 February 2027. Late penalties: Verspätungszuschlag of 0.25 % of tax owed per month of delay, capped at 25,000 EUR.

Documents to keep. §147 AO (Abgabenordnung) imposes retention of tax documents for 10 years for taxpayers subject to accounting and 6 years for individuals. For Bitcoin: keep monthly CSV exports of each platform, blockchain×BlockchainA public, shared ledger that records every Bitcoin transaction in blocks linked together cryptographically. Each participant in the network keeps a copy.See in the lexicon → transaction confirmations (txid), Koinly/CoinTracking/Blockpit tax reports generated annually, and source-of-funds justifications in case of KYC×KYC (Know Your Customer)Mandatory identification procedure that regulated platforms apply to their users : ID document, proof of address, and so on.See in the lexicon → request from the Finanzamt. An investor who closed a Sparkasse account in 2021 and sold the associated BTC in 2026 must be able to produce a CSV export from 2020-2021 five years later.

Third-party tools ELSTER compatible. Koinly, CoinTracking and Blockpit all three generate a pre-filled German tax report (FIFO×FIFO (First In First Out)Capital gains method that treats the first bitcoins bought as the first sold. Used in Germany, Italy and the United States.See in the lexicon → applied, short vs long sales separated, Freigrenze tested), exportable as PDF to attach to the return or XML format compatible with ELSTER for direct import. For a DCA×DCA (Dollar Cost Averaging)Buying a small fixed amount at regular intervals (for example 100 EUR a week), regardless of price. Smooths the average purchase cost and neutralises timing bias.See in the lexicon → investor with fewer than 100 operations per year, a home-made spreadsheet is enough. Beyond that, the annual subscription justifies itself by hours saved.

Special cases: DE-CH/AT cross-borders, salaries paid in BTC, inheritance

Three situations fall outside the standard case and deserve specific mention.

DE-CH or DE-AT cross-borders. A German resident working in Switzerland (typical case of Basel, Lörrach, Konstanz cross-borders) or in Austria remains subject to the §23 EStGק23 EStG (Spekulationsfrist)German tax provision that fully exempts Bitcoin capital gains after a holding period of more than 12 months.See in the lexicon → regime on his cryptoassets held in self-custody×Self-custodyModel in which you hold your own private keys. Your bitcoins depend on no third party. This is Bitcoin's founding promise.See in the lexicon →. The Germany-Switzerland bilateral convention of 1971 (revised 2010 on information exchange×ExchangeService that lets you buy, sell and swap cryptocurrencies against fiat money. Examples : Kraken, Coinbase, Bitstamp, Bitvavo. Most are custodial.See in the lexicon →) does not specifically cover cryptoassets, but the Bundesfinanzhof (BFH) case law confirms that the determining criterion is the habitual tax residence (centre of vital interests). Andreas, Munich-based, who would go work at a Zug fintech while keeping his Munich apartment, would remain taxable under §23 EStG. If he shifts his residence to Switzerland (departure letter to the town hall, closure of German domicile), he enters the Swiss regime described in the previous article. The timing of the residence change directly affects the taxation of later sales.

Salary paid in Bitcoin. A marginal fraction of German tech companies offers employees a Bitcoin salary option (Galaxus, a few Berlin startups). The Bundesarbeitsgericht (BAG) confirmed in 2024 that salary must be paid in EUR as legal currency, but part can be converted to BTC at the employee's request, considered as salary at the equivalent EUR amount. The EUR-BTC conversion is made at value on payment day, declared as classical salary income on Anlage N. The 12-month Spekulationsfrist then applies to these received BTC: if the employee sells them within 12 months, taxable short gain, otherwise exemption. The tax acquisition cost of the BTC is its EUR value on salary receipt day.

Inheritance and succession. In case of BTC transmission by succession, the heir takes over the holding duration of the deceased (tax continuity §11 ErbStG applied by analogy). So if Andreas dies in 2030 with 0.8 BTC held since 2020, his heirs inherit positions already past 12 months and can sell without §23 EStG taxation, even shortly after inheritance. The tax acquisition cost remains Andreas's (22,000 EUR cumulated), so the gain on sale is calculated against this cost. The inheritance itself is subject to German succession duties (Erbschaftsteuer) by degree of kinship: 500,000 EUR allowance for spouse, 400,000 EUR for child, 200,000 EUR for grandchild, 20,000 EUR for unrelated heir. The BTC is valued at market value on death day. For the technical transmission of private keys and seed phrases, see the dedicated Bitcoin inheritance article.