Crypto Loss Carryforward in Germany: What Happens to Old Losses Under the 2027 Tax Plan

A crypto loss carryforward is the part of your losses from crypto sales that the tax office has formally assessed at year-end because it could not be offset in the same year. It does not sit in your account or in your app but in a notice of its own, and it can only be set against one very particular kind of gain. If you have realised losses during the current year, you should therefore keep two things apart: how much loss arose, and what that loss may actually be set against later.

The question is gaining weight right now. In September 2026 the Federal Ministry of Finance circulated a draft bill that would assign gains from crypto assets to income from capital assets from 2027 onwards and tax them at a flat 25 percent. Existing holdings are to remain under the current system. It is precisely at that seam that the fate of an assessed loss carryforward is decided: whether it still finds a counterpart. The market provides the occasion: Bitcoin traded at 75,887 US dollars at around 07:00 UTC on September 16, 2026, roughly 1.7 percent below the previous day (source: CoinGecko price query, retrieved by us).

Crypto loss carryforward: what the term in your tax notice means

In Germany, gains and losses from selling crypto assets within a year of purchase fall under private disposal transactions in section 23 of the Income Tax Act. In its judgment of February 14, 2023 (case number IX R 3/22), the Federal Fiscal Court confirmed that Bitcoin, Ether and Monero are other economic assets within the meaning of that provision. The same logic therefore applies to them as to gold, collectibles or foreign currency balances.

A private disposal transaction is a sale in which no more than one year lies between acquisition and disposal. A loss carryforward is the amount of unrelieved negative income that the tax office assesses separately as at December 31 of a year so that it can still be used in later years. Together, the two produce the situation at issue here: you can hold a loss that exists for tax purposes without it doing anything for you the following year.

Why the carryforward does not arise automatically

The assessment does not happen by itself. It requires the losses to have been declared in your tax return, as a rule in Annex SO. Anyone who did not report their sales at all, because the bottom line was negative anyway, frequently has no assessed carryforward either. If you never declared your sales, you can make that good through Annex SO for the year in question, provided the year is still open under procedural rules.

Section 23 ITA: why crypto losses land in a ring-fenced pot

The decisive sentence sits in section 23(3) sentence 7 of the Income Tax Act and is short: losses may only be offset up to the amount of the gain the taxpayer realised in the same calendar year from private disposal transactions. In the same sentence, the statute explicitly rules out the general loss deduction under section 10d. Sentence 8 then opens a narrow door: the losses reduce the income you realise from private disposal transactions in the immediately preceding or in subsequent assessment periods.

In practice that means a crypto loss from 2026 may be carried back against a crypto gain from 2025 or carried forward against gains from 2027 and later, as long as those gains are also private disposal transactions. It does not run against your salary, your rental income or your dividends. This is not an innovation of crypto taxation but the basic mechanics of this category of income, and they have applied unchanged for decades.

The second pot sits in section 20(6) of the Income Tax Act and works as a mirror image. Losses from capital assets may not be offset against income from other categories; they only reduce income you realise from capital assets in subsequent assessment periods. Within that pot there are narrower compartments still, such as the familiar special pot for share disposals. There is no connection between the section 23 pot and the section 20 pot.

Checking your tax notice: where the remaining loss carryforward is shown

The assessment follows section 10d(4) of the Income Tax Act: the loss carryforward remaining at the end of an assessment period is to be assessed separately, by the tax office responsible for the taxation. In practice you receive a notice of its own for this, headed with the separate assessment of the remaining loss carryforward, or a corresponding section in your income tax notice.

What to look for when you check:

• Is an amount shown for losses from private disposal transactions, and does it match your own calculation?
• Is the assessment year the year in which you realised the losses?
• Is there a second assessment alongside it for losses from capital assets, from shares or certificates for instance? These two amounts do not belong together and must not be added up.
• Has the tax office cut amounts or applied different figures? Then the one-month objection period runs from notification.

Anyone who would rather not assemble the figures by hand usually works with a portfolio or tax tool that sorts disposals by holding period and maps the acquisition sequence. Which programs cover the German rules and what they cost is set out in our comparison of crypto tax tools and portfolio trackers. What matters in every case is reconciling with the notice: the tool calculates, the tax office assesses.

The 1,000 euro exemption limit: how it changes loss relief in the current year

Section 23(3) sentence 5 of the Income Tax Act provides that gains remain tax-free if the total gain realised from private disposal transactions in the calendar year came to less than 1,000 euros. The figure used to be 600 euros; the higher threshold has applied since the 2024 assessment period. It is an exemption limit and not an allowance: exceed it and the entire gain is taxable, not merely the excess.

For the loss side, what matters is that the exemption limit applies to the total gain for the year. If you realise gains and losses in the same year, you offset within the year first; only the result is measured against the threshold. A small gain pushed below the threshold by losses therefore stays tax-free, but it consumes the losses used. That is the point at which realising a loss shortly before year-end becomes an arithmetic exercise: the loss is spent and the tax saving is zero, because no tax would have fallen due on the gain in any case.

Flat withholding tax from 2027: what the draft bill proposes for crypto assets

The Federal Ministry of Finance's draft bill from September 2026 proposes to assign gains from crypto assets to income from capital assets irrespective of the holding period and to charge them at the special rate of 25 percent. Together with the solidarity surcharge that works out at 26.375 percent, with church tax on top where applicable. Income from lending and staking would also be treated as investment income under the draft.

A draft bill is a working document of the ministry. It passes through coordination within the federal government, then goes to the Bundesrat as a government bill, and only after that to the Bundestag. At the time of writing, no bill on this question is before the Bundestag. Everything set out here about the period after December 31, 2026, therefore describes a planned position and not the law in force.

What matters in the draft for holders of losses

There are two points. First, the assignment to section 20 ITA moves future gains into the capital assets pot, where an old section 23 carryforward achieves nothing. Second, under the draft the switch would apply only to crypto assets acquired after the cut-off date. Together, those two points determine how large your future counterpart still is.

Grandfathering at December 31, 2026: which coins stay in which system

Under the draft, the new rules would cover only crypto assets acquired after December 31, 2026. Whatever you bought before that would remain in the current system with its one-year holding period, and thus within the scope of section 23 ITA. That produces a situation many investors underestimate: from 2027, two groups of coins could sit side by side in your portfolio, treated under different tax rules, with their gains landing in different offset pots.

For the allocation, what counts is the acquisition date of the individual unit, not the date you opened the account. Anyone buying regularly, through a savings plan for example, accumulates tranches from both worlds across the turn of the year. How the cut-off date affects new purchases is covered in detail in our article on the holding period and grandfathering.

The bottleneck for the carryforward: when the offsetting pool shrinks

Here lies the actual finding, and it is milder than the widespread shorthand suggests. An assessed loss carryforward from private disposal transactions does not expire on a cut-off date. It has no time limit and remains in place until matching gains arise. What would change under the draft is not the shelf life of the carryforward but the pool of gains it can run against.

That pool shrinks more slowly than it first appears. Three sources remain:

• Existing holdings. Coins acquired before the cut-off date would stay in the old system. A sale within the one-year window still produces a gain under section 23 ITA, against which the carryforward runs.
• Other economic assets. Section 23 ITA covers more than crypto assets. Gains from selling physical gold, collectibles or foreign currency balances within the one-year window belong in the same pot.
• Real property. Gains from disposing of real estate within the ten-year window also fall under section 23 ITA.

Anyone who holds crypto assets exclusively, only buys more after the cut-off date and leaves existing holdings untouched beyond the one-year window does genuinely have a problem: hardly any gains then arise that fit the old pot, and the carryforward sits unused. It is not an expiry, it is an idle run.

Why realising gains for their own sake rarely pays

From this situation people readily derive the advice to realise gains in 2026 in order to use up the carryforward. The thought is arithmetically comprehensible and economically risky. A sale made purely for tax reasons changes your position in the market, costs fees and spread, and exposes you to the risk of having to buy back at a higher price. Whether it pays depends on your personal tax rate, the size of the carryforward and your provider's trading costs. The fee side can be checked beforehand, for instance through our comparison of the best crypto exchanges.

Claiming a loss assessment retrospectively: which deadlines apply to past years

Many investors never declared their losses from the years 2022 to 2025, because there was nothing to pay anyway. That carryforward then does not exist for tax purposes. Whether it can be assessed retrospectively depends on whether an assessment is still possible for the year in question. Section 10d(4) sentence 4 ITA ties the assessment to the tax bases of the income tax notice, and whether a notice can still be amended is governed by the Fiscal Code.

Put simply: as long as an income tax return can still be filed for a year, or a notice is still procedurally open, an assessment comes into consideration. Where the notice has become final and can no longer be amended, it is generally ruled out. This classification turns on the individual case, particularly on provisional clauses and on whether there was an obligation to file. It belongs in the hands of a tax adviser, and this article does not replace that.

One point matters on the evidence side: without solid records of the acquisition date, acquisition cost and disposal price, making a loss plausible becomes difficult. With worthless or delisted tokens there is the further problem that, as a rule, no loss arises under section 23 ITA without a disposal event. A token that has merely fallen in value and is still sitting in your wallet produces nothing at all for tax purposes.

Lending and staking: why this income sits in a third pot

Income from lending and staking is not a disposal gain. Under the law in force it is regularly captured as other income under section 22 no. 3 ITA and charged at your personal tax rate. On January 26, 2026, the Cologne Tax Court ruled that income from Bitcoin lending is not subject to the flat withholding tax but to the often higher personal rate; the classification is therefore not conclusively settled, and objections against such notices are a topic we took up in our article on the taxation of lending.

For your loss carryforward the consequence is this: a loss from a crypto sale does not reduce your lending income. That income sits in a different category. Should the draft bill become law in this form, lending and staking would move into investment income in future, leaving them just as far out of reach for the old carryforward as future disposal gains from new purchases.

Three figures you need for your own calculation

Before you decide anything, you need three values, documented rather than estimated:

1. The size of your assessed carryforward from the most recent assessment notice, split between private disposal transactions and capital assets.
2. The extent of your existing holdings, meaning which units were acquired before December 31, 2026, and how large the unrealised gains on them are.
3. The cost of realising at your provider, meaning the trading fee and spread on the amount you would move.

Without these three figures, any statement about whether a sale before the turn of the year is worthwhile is guesswork. With them it becomes a calculation that you or your tax adviser can set out in a few minutes.

Checking your crypto loss carryforward: what to take away

1. Dig out the notice and check whether a carryforward has been assessed at all. Make sure that losses from private disposal transactions and losses from capital assets are shown separately. If you lack the basis for the reconciliation, put your records in order first; the programs for that are in our comparison of crypto tax tools and portfolio trackers.
2. Sort your holdings by acquisition date. As long as the draft has not been passed, nothing changes; if the decision comes, December 31, 2026, determines which unit sits in which system. Savings plan investors should look especially closely, because there every execution is a tranche of its own with its own acquisition date; which providers document executions cleanly is set out in our comparison of Bitcoin savings plans.
3. Weigh the costs before every realisation. Fees and spread can eat up the tax advantage, especially on smaller amounts; you will find providers' terms in our comparison of the best crypto exchanges. A tax-driven transaction that does economic damage is a poor trade.

The sober summary: your loss carryforward does not run out. It only becomes worthless if you never again realise a gain that fits the same drawer. Whether that happens depends less on the legislator than on your own conduct over the coming years.

(As of September 16, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy. It is not tax advice either: legislative proposals change, so have individual tax questions clarified by a tax adviser.)

Sources: section 23 ITA and section 10d ITA as published on gesetze-im-internet.de, retrieved on September 16, 2026.