Germany Clarifies Crypto Tax Gains Calculation with Simple Formula

The German government has made it clear how to calculate crypto tax gains, and it's simpler than you think. The formula is straightforward: disposal proceeds minus acquisition cost minus fees gives you the gain. If the sale happened within twelve months and the total gain is above 1,000 euros, you pay tax on it at your personal rate.

However, things get complicated if you've bought the same currency several times, as then the consumption order decides which coins count as sold. The Federal Ministry of Finance sets out the order: individual identification comes first, and where that's not possible, the crypto assets acquired first are counted as the ones sold first.

According to the formula, the taxable gain under Section 23 of the German Income Tax Act works out like this: disposal proceeds minus acquisition cost minus deductible expenses equals gain or loss. The acquisition cost includes the purchase price together with the buying fee, and deductible expenses cover fees on sale and transaction costs directly attributed to the transaction.

The exemption threshold stands at 1,000 euros, and it applies to all private disposal transactions of a year taken together. A gain of 1,001 euros means you pay tax on the full amount, not just the one euro above the line.