German prediction-market taxes: the one-year rule and the Freigrenze

Germany taxes private sales under §23 EStG: if you sell a private asset within one year of buying it, the gain is taxed at your income rate. Hold longer than one year and the gain is tax-free — the Spekulationsfrist. For Polymarket, that means the market's resolution date can decide your tax bill, not just your trading skill.

Buy 100 “Yes” shares at $0.40 and the market resolves YES after fourteen months: the $100 redemption is tax-free — the holding period ran past the Spekulationsfrist. Resolve after ten months and the same $100 is taxable as a private sale.

Bitfork Tax's Germany pack shows this split directly: gains on positions held under a year are labeled taxable, gains on positions held a year or longer are labeled tax-free — with the Freigrenze check underneath.

Private sales are only taxable if total proceeds from private sales exceed €1,000 in the calendar year (the Freigrenze — it's a threshold on proceeds, not on gains). Below it, private sales are tax-free entirely; above it, the whole gain is taxable, not just the excess.

Because Polymarket settles in USDC, Bitfork Tax converts your short-term proceeds to EUR using a rate you set (session-only) and compares against the threshold. It's an approximation — your Steuerberater will use the official ECB rate for each transaction date.

Germany requires FIFO for private sales — no HIFO or specific-id optimization. Losses from worthless positions offset gains within the same year's private-sale total. Bitfork Tax's Germany pack uses FIFO and reports worthless positions as zero-proceeds disposals, so losses are visible in the export.