Bitcoin Tax: One Year Past the $126,080 Peak, Losses No Longer Count

Bitcoin trades at $82,558, or €73,577, on Friday morning. The all-time high of $126,080 was set on October 6, 2025, which leaves the price 34.5 percent below that mark. Measured in euros, the gap to the record of €107,662 is 31.7 percent, because the dollar has weakened since. Prices are from CoinGecko.

That date is the reason to talk about bitcoin and tax today. October 6, 2025 is now more than twelve months ago. Anyone who bought on that Monday, or in the days that followed, has passed the one-year holding period under Section 23 of the German Income Tax Act. A sale would be tax-free from today. That sounds like an advantage, and with the price down by roughly a third it becomes the opposite: tax-free also means the tax office no longer recognizes the loss.

Bitcoin and Tax: What Section 23 of the Income Tax Act Governs in October 2026

Germany treats crypto assets as other economic goods. They therefore fall under the private disposal transactions of Section 23 of the Income Tax Act, not under the flat-rate withholding tax that applies to equities and funds. That produces the rule almost every investor knows: hold a bitcoin for more than a year and the sale is tax-free. Sell within the year and the gain is taxed at your personal income tax rate.

A private disposal transaction is not triggered only by a sale for euros. Swapping into another crypto asset counts as a disposal as well, and the coin received counts as acquired at the same moment. Its one-year clock starts over. Anyone who swapped bitcoin into ether in May triggered two taxable events, even though no euro changed hands.

The period is counted to the day. A purchase on January 15 starts the clock on January 16 and ends it on January 16 of the following year. What matters is the date of the contractual transaction, not the day the coins arrive in the wallet. On exchange purchases the two usually coincide; on transfers between wallets they do not.

The All-Time High of October 6, 2025: Since October 7 the Paper Loss Is Worthless for Tax

The holding period works in both directions, and that second half tends to get lost. Once the year has run, the transaction is irrelevant for tax. A gain stays tax-free, and a loss becomes unusable in return. It enters neither the loss carry-back nor the loss carry-forward, and it reduces not a single euro of tax.

For someone who bought at the record price on October 6, 2025, that means something specific. Up to October 6, 2026 a sale would have produced a loss the tax office recognizes. Since October 7, 2026 the same sale produces nothing at all. On a €10,000 stake and a 31.7 percent decline measured in euros, that is €3,170 of loss position gone.

The loss also has to be realized. A price decline inside the wallet is nothing for tax purposes. Only a sale or a swap turns a paper loss into a loss that a tax return knows about. Waiting for better prices and letting the deadline pass is itself a decision, even when it does not feel like one.

The €1,000 Exemption Limit: One Euro Above It Makes the Entire Gain Taxable

Gains from private disposal transactions stay tax-free as long as they add up to less than €1,000 in a calendar year. The figure was raised from €600 and applies per person per year. The important word is limit: this is not an allowance from which only the excess would be taxed. Reach the threshold and the whole gain becomes taxable, from the first euro.

The threshold counts across all private disposal transactions in a year, not only crypto. Anyone who sold a coin collection or gold at a profit inside the one-year window alongside a bitcoin gain has to add both together. Spouses are assessed separately, and each has their own threshold.

One sequence is easy to miss: the exemption limit is tested before an assessed loss carry-forward from earlier years is deducted. An old loss will not retroactively push you under the threshold. It reduces the taxable amount only in a second step.

FIFO and Individual Attribution: The Finance Ministry Circular of March 6, 2025 Calculates per Wallet

Anyone who bought in tranches faces the question of which bitcoin actually leave the house on a sale. The Finance Ministry circular of March 6, 2025, file reference IV C 1 - S 2256/00042/064/043, settles this point. The principle is individual attribution: where the separate acquisitions can be told apart, the holding actually sold is the one that counts.

Where individual attribution is not possible, the crypto assets of a trading designation acquired first count as sold first for the purpose of the holding period. Under margin numbers 61 and following, this first-in-first-out method may also be assumed to simplify the valuation. The assessment is wallet-specific. Within one wallet you have to keep the method you chose until every bitcoin in that wallet has been disposed of. Only then may you calculate differently on a new acquisition.

In practice FIFO decides whether a sale produces a loss or a gain. Someone who bought cheaply in 2023 and expensively in October 2025 sells the old, cheap holdings first under FIFO. Those are long past the one-year mark, the sale stays tax-free, and the expensive 2025 holding stays put along with its loss. Anyone who wants to lift that loss instead needs individual attribution, and therefore a wallet structure that supports it. A separate wallet per purchase period is laborious and solves the problem at the root. A tax tool with wallet attribution takes the arithmetic off your hands, but it does not replace the records behind it.

Offsetting Bitcoin Losses: Which Gains a Loss Can Be Set Against

A loss realized inside the one-year window is no blank cheque. It can be offset only against gains from other private disposal transactions, meaning crypto gains in the same year or gains from other assets under Section 23 of the Income Tax Act. Offsetting against employment income, against investment income from equities or interest, and against current income from staking and lending is ruled out.

If a negative figure remains after that offset, the law knows two routes. The carry-back goes into the immediately preceding year and reduces positive income from private disposal transactions there. The carry-forward runs into the future without a time limit and waits for matching gains. Both require the loss to be declared in the tax return and assessed separately by the tax office. A loss nobody declared does not exist for tax purposes.

The planned reform adds weight to this point. Should future crypto gains fall under Section 20 of the Income Tax Act, old losses from Section 23 could not be offset against them, because the two categories of income stay separate. A loss carry-forward assessed today could then only wait for private disposal transactions that would barely exist in that form.

A Worked Example at €73,577: What a Sale Inside the One-Year Window Costs

Suppose you bought half a bitcoin for €45,000 on February 15, 2026. This Friday that same half bitcoin stands at €36,789, a shortfall of €8,211. The one-year period runs until February 16, 2027, so the loss can still be lifted.

If you made a €6,000 gain elsewhere in the same year on a crypto sale inside the window, realizing the loss cuts that gain to zero. At a marginal tax rate of 42 percent you save roughly €2,520. The remaining €2,211 goes into the assessment and is available next year, or in a carry-back to 2025.

The same transaction with a purchase dated October 6, 2025 looks different. On half a bitcoin the loss would be around €17,000, and it has been unusable since October 7, 2026. The tax saving is zero. The one consolation: a later gain on that holding is tax-free as well, however large it turns out to be.

Four Cases for Bitcoin Holders: Bought in 2024, Bought at the Peak, Bought in 2026, Savings Plan Across the Year End

That fourth row is why savings plans deserve particular attention this quarter. Under the draft, a savings plan running across the year end would split into two groups: instalments up to December 31, 2026 would stay under the old law with its one-year period, and instalments from January 2027 would fall under the new one. A single position in the exchange app would then hold two tax regimes.

Records for the Tax Office: Documentation Duties and the Reporting Regime Since January 2026

The 2025 Finance Ministry circular contains, for the first time, its own section on cooperation and documentation duties, margin numbers 87 to 112. For each transaction you have to document the date, the type, the quantity and the euro value, plus any fees incurred and the attribution method chosen. Anyone using FIFO records that; anyone using individual attribution does the same. In advisory practice the platform, the wallet address and the transaction hash are added.

Since January 1, 2026 the reporting duties under the EU directive DAC8 also apply. Providers report transaction data to the tax administration, which can then reconcile it with your return. The era in which a crypto position simply did not show up is over. The reverse holds too: whatever gets reported, you should be able to explain cleanly yourself.

It becomes awkward with exchanges that have ceased operating, or where you have lost access. Anyone who cannot document the acquisition date of a holding will struggle to invoke an expired one-year period. For missing acquisition data, the ministerial draft provides for a flat 50 percent of the disposal proceeds as the tax base under the future withholding regime. Documenting legacy holdings therefore secures an advantage that cannot be recreated later. Before a sale it is worth looking at the routes for swapping bitcoin into euros, along with the question of which records each platform issues.

Staking and Lending: A Separate One-Year Period From the Inflow

Staking income matters less for bitcoin than for ethereum or solana, but it is not without relevance. Anyone earning income through wrapped-bitcoin constructions or through lending receives income that has to be recognized at its euro value at the time of inflow. For the tokens received, a separate one-year period begins, counted from that inflow.

Sell such tokens within twelve months of the inflow and the gain falls under Section 23 of the Income Tax Act. After that it is tax-free. The ongoing income itself is unaffected: it has to be declared in the year of inflow, even if you sold nothing. This double assessment is the most common error in home-made spreadsheets.

The Ministerial Draft and December 31, 2026: What Changes for New Purchases

On October 8, 2026 the Bundestag rejected the Greens' bill on the taxation of crypto assets, printed paper 21/5752, by 445 votes to 132 out of 577 cast. A Left Party motion on the same subject, printed paper 21/5824, also failed; the Greens voted for it, while the CDU/CSU, the AfD and the SPD voted against. The details are in the Bundestag's text archive and in our report on the vote on the crypto holding period.

What matters for your planning, though, is the government's own draft. The Federal Ministry of Finance circulated it for consultation on September 30, 2026, associations had until October 6 to comment, and the cabinet is due to take it up on October 14, 2026. The plan is to assign bitcoin and other exchange crypto assets to investment income under Section 20 of the Income Tax Act. The one-year period would cease for newly acquired holdings, and tax would be charged regardless of holding period at 25 percent flat-rate withholding tax plus the solidarity surcharge, around 26.375 percent together. The ministry expects additional revenue of €350 million a year in the long run.

The draft puts the grandfathering cut-off at December 31, 2026. Anything acquired or received after that would fall under the new law. Older holdings would stay with Section 23 of the Income Tax Act and therefore tax-free after a year. Withholding at source by providers is not due to apply until January 1, 2028. None of this is settled: the Bundestag and the Bundesrat still have to pass the law, and cut-off dates have been pushed back more than once in the process. On October 12, 2026 the petitions committee also takes up the holding period in public.

Bitcoin Tax: Without a Sale by December 31 the Loss Expires

The one-year period is not a theoretical matter this autumn. It expires separately for every holding, and it takes the loss with it when it goes. Three steps make sense before the year ends:

1. Sort your holdings by purchase date. Record the date, the quantity and the euro value for each acquisition, and mark which positions have not yet reached the one-year mark. A portfolio tracker with a tax function handles this through the exchange import; checking it stays your job.
2. Go through your loss positions before the period ends. Anyone who bought in 2026 and is down can only realize the loss while the clock is still running. Which routes to a sale deliver the lowest fees and the best records decides the rest.
3. Secure your records for grandfathering. Export the transaction history of every platform you have used and store it outside the exchange. When switching provider, exchanges with a complete tax report help you avoid later gaps.

(As of October 9, 2026. This article is not investment advice and not tax advice. Prices, draft legislation and fee structures change; check the terms with the provider before you buy, and check your own tax position with a tax adviser.)