Section 23 EStG – Crypto Tax Rules in Germany

When working with Section 23 EStG, the part of the German Income Tax Act that handles private‑sale transactions of assets, including cryptocurrencies, you’re dealing with the rulebook that decides when a crypto swap becomes taxable. It directly links to Crypto Tax, the calculation of tax owed on crypto gains and to Capital Gains Tax, the tax on profits from selling assets held longer than one year. In Germany, the rule is clear: if you sell a token within the one‑year holding period, the profit falls under Section 23 and is taxed at your personal income rate. This creates a simple semantic triple: Section 23 EStG governs private‑sale transactions of crypto assets. For quick reference, the rule is known as Section 23 EStG. Understanding this connection helps you avoid surprise bills and plan your trades around the 365‑day rule.

Why it matters for crypto investors

Beyond the basic hold‑time rule, the tax impact of Section 23 spreads to other strategies. Citizenship‑by‑Investment, programs that grant residency or citizenship in exchange for investment can change your tax residency, potentially moving you into a lower‑rate jurisdiction or a tax‑friendly regime like Malta or Puerto Rico. Another practical angle is Crypto Donation Tax Benefits, the ability to deduct charitable crypto contributions from your taxable income. By donating directly, you sidestep capital gains tax and still claim a full deduction, a move that many German investors use to reduce their Section 23 burden. The semantic link here is: Citizenship‑by‑Investment influences crypto tax liability, while crypto donations provide a tax deduction under Section 23 EStG. Knowing these levers lets you turn a tax rule into a planning tool.

When you keep good records, calculate the exact holding period, and consider residency or donation options, the complexity of Section 23 becomes manageable. Tools like transaction trackers, spreadsheet logs, and specialized tax software can match each sell‑event with its acquisition date, ensuring you only pay tax when the one‑year rule applies. If you’re unsure whether a token qualifies as a “private sale” or a “business activity,” the German Income Tax Act also defines thresholds that separate hobby trading from a commercial operation, another semantic pair: German Income Tax Act distinguishes private crypto trading from business activity. Below you’ll find a curated set of articles that walk through exchange reviews, airdrop guides, and detailed tax‑saving tactics, giving you actionable steps to stay compliant and keep more of your crypto earnings.