Capital gains in Germany
A capital gain or loss is calculated as follows:
Sale value of the crypto – Acquisition cost (or cost basis) = Capital Gain/Loss
The cost basis includes both the amount paid to purchase the asset and any fees incurred during the buying and selling process.
The one-year rule
In Germany, the taxation of capital gains from cryptocurrencies depends on the holding period and follows specific rules:
if you hold the crypto for more than 1 year before selling, converting, or using it for payments, the gain is tax-free
if you sell within 1 year, the gain or loss is taxable
How to calcolate the cost basis
If you bought the same crypto several times before selling it at different prices you must use the FIFO (First In, First Out) method to determine the acquisition cost of the crypto being sold. That means the crypto you acquired first in time is treated as the one you sell first.
Wallet-by-wallet analysis
The FIFO method must be applied separately for each individual wallet or exchange. This means that the order of your purchases and sales must be tracked independently in each wallet.
Example: if you bought ETH on Wallet A and later ETH on Wallet B, when you sell on Wallet A only transactions from Wallet A count toward FIFO — Wallet B’s transactions are not mixed.
Example of capital gain calculation
Let’s look at a practical case for ETH purchased at different times using two separate wallets: A and B.
Date | Type | Wallet | Quantity | Price per ETH | Total value |
12 Mar 2023 | BUY | A | 0,50 ETH | €1.400,00 | €700,00 |
23 Jan 2024 | BUY | B | 1,00 ETH | €1.500,00 | €1.500,00 |
01 Feb 2024 | BUY | A | 0,50 ETH | €2.000,00 | €1.000,00 |
07 Apr 2024 | BUY | A | 1,00 ETH | €1.600,00 | €1.600,00 |
03 Jun 2024 | SELL | A | -1,50 ETH | €1.800,00 | €2.700,00 |
Step 1: apply 1-year rule
The 0,5 ETH bought in March 2023 has been held for over 1 year.
This portion is exempt from taxes.
Step 2: apply FIFO on the taxable portion (1.0 ETH)
The next crypto in line has been bought in January 2024 but it must be ignored because that crypto has been bought with another wallet. Therefore the next crypto in line is the 0,5 ETH bought on 01 Feb 2024 with a cost of €1.000,00. Then the 0,5 ETH from 07 Apr 2024 costed €800,00.
Step 3: calculate taxable gain
Sale value: €1.800,00 × 1,00 ETH = €1.800,00
Acquisition cost: €1.000,00 + €800,00 = €1.800,00
Taxable gain = €1.800,00 – €1.800,00 = €0
Losses
If you generate losses from selling crypto within 1 year, they can be carried forward to offset future crypto gains in subsequent tax years.