Crypto Taxation in Depth: One-Year Holding Period, Freigrenze, Staking and Lending Income, Wallet-by-Wallet FIFO and the BMF Guidance
Apply the one-year rule, the €1,000 Freigrenze, the §22 rules for staking and lending rewards and the wallet-by-wallet FIFO method of the BMF letter to a real crypto transaction history.
What you will learn
- Which rule applies to a crypto sale, a swap, a staking reward and a lending fee.
- How the €1,000 and €256 Freigrenzen work and why a Freigrenze is not a Freibetrag.
- How the BMF letter applies FIFO wallet by wallet.
- What the 2025 BMF letter expects from your records.
Explanation
The general orientation on crypto taxes is covered in the course "Bitcoin & Crypto Basics". This lesson goes into the mechanics that decide how much tax you pay, based on the BMF letter (Bundesministerium der Finanzen, the federal finance ministry) of 6 March 2025, which replaced the letter of 10 May 2022. General orientation for private investors in Germany only; check your own case with a Steuerberater.
Two regimes in one wallet
A sale of coins held as private assets is a privates Veräußerungsgeschäft (private sale transaction) under §23 EStG (Einkommensteuergesetz, income tax law). A swap of one coin for another and paying with crypto count as sales too. Held more than one year, the gain is tax free and a loss is irrelevant; held one year or less, the gain is taxed at your personal income tax rate, not at the 25 percent Abgeltungsteuer.
Rewards from staking (locking coins to help validate a proof-of-stake network), lending (handing coins to a platform for a fee) and similar services are sonstige Einkünfte (other income) under §22 Nr. 3 EStG. They are taxed at your personal rate on the euro value at receipt, which becomes the acquisition cost of the reward coins. The BMF letter does not apply the ten-year extension of the holding period to crypto, so staked coins keep the one-year period.
Two Freigrenzen
A Freigrenze (exemption limit) is all or nothing: below the limit nothing is taxed; at or above it the whole amount is taxed. A Freibetrag (allowance) is always deducted. Private sale gains have a Freigrenze of €1,000 per calendar year since 2024 (€600 before); other income under §22 Nr. 3 has a separate Freigrenze of €256. Both cover all transactions of that type, so gold coins sold within a year count against the same €1,000 as crypto (next lesson).
Wallet-by-wallet FIFO
The BMF letter asks first for individual identification of the units sold. Where that is impossible, FIFO (first in, first out) decides which units are sold, and the acquisition cost may be the average cost or, for simplicity, FIFO. The method is applied wallet by wallet: holdings in different wallets or exchanges are not mixed, the method is chosen per coin and wallet, and it must be kept until that coin is sold out of that wallet. Moving coins between your own wallets is not a sale; the units keep their dates and costs.
Records and tax reports
The 2025 letter accepts software-generated Steuerreports (tax reports) if they are plausible and complete, with the settings attached, and every sale must be traceable: coin, units, dates, prices, holding period, gain. The burden of proof is yours; a hack or an exchange insolvency does not remove it, and the tax office may estimate (§162 AO) if records are missing. §23 losses can only be set against §23 gains, carried back one year or forward.
Worked example
Hypothetical example: marginal tax rate 35 percent; solidarity surcharge, church tax and exchange fees ignored; one wallet, FIFO.
- 10 March 2025: buy 0.5 BTC at €20,000 per BTC = €10,000.
- 20 November 2025: buy 0.5 BTC at €30,000 per BTC = €15,000.
- 1 April 2026: sell 0.6 BTC at €40,000 per BTC = €24,000.
FIFO assigns the first 0.5 BTC to the March 2025 lot: held more than one year, so the gain 0.5 × €40,000 − €10,000 = €10,000 is tax free. The remaining 0.1 BTC comes from the November lot: proceeds €4,000, cost 0.1 × €30,000 = €3,000, gain €1,000 within one year. It reaches the Freigrenze, so it is fully taxable: €1,000 × 35% = €350. At €999 the tax would be zero.
In 2026 the investor also received staking rewards worth €300 at receipt, above the €256 Freigrenze: €300 × 35% = €105. Total tax €455. Exclusions: fees would reduce the gain; church tax and solidarity surcharge would add to the tax.
Wallet logic: had the November lot sat in a second wallet, a sale of 0.5 BTC from the first wallet would have been entirely tax free. Which wallet you sell from is a real decision, and it must match the blockchain record.
Common mistake
Practice activity
On paper, one wallet, FIFO, fees ignored: 5 February 2025 buy 2 ETH at €1,500 each; 15 September 2025 buy 1 ETH at €2,500; 10 March 2026 sell 2.5 ETH at €3,000 each. In the same year a gold coin bought seven months earlier is sold with a gain of €900. Calculate the taxable private sale gain (a) without and (b) with the gold coin.
Show solution
FIFO: 2 ETH from the February 2025 lot, held more than one year, gain 2 × €3,000 − €3,000 = €3,000, tax free. 0.5 ETH from the September lot: proceeds €1,500, cost €1,250, gain €250, held less than one year.
(a) §23 total €250, below the €1,000 Freigrenze: taxable gain €0.
(b) §23 total €250 + €900 = €1,150 reaches the Freigrenze: the whole €1,150 is taxable at the personal rate. Holding the gold coin for one year would have brought the total back under the limit.
Limitations: fees, the average-cost option and staking rewards are ignored.
Key takeaways
- Sales and swaps within one year fall under §23 EStG at your personal rate; after one year they are tax free.
- Staking and lending rewards are other income under §22 Nr. 3, taxed at receipt, with a €256 Freigrenze.
- The €1,000 Freigrenze is all or nothing and covers every private sale of the year.
- FIFO is applied wallet by wallet, and the BMF letter of 6 March 2025 expects complete, traceable reports.
Next step
The next lesson draws the line between private sale transactions and capital income for gold, Xetra-Gold, commodities and certificates.
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