The most common and most likely answer to this crossword clue is the 6 letter word KOBOLD
I've seen this crossword clue in The Guardian
K
O
B
O
L
D
More clues leading to the result KOBOLD
Buddy explains!
The straight part
We know that "German spirit" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case german spirit = kobold.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does KOBOLD mean?
KOBOLD noun- (German mythology) An ambivalent, sometimes vindictive, spirit that is capable of materialising as an object or human, often a child; a sprite.
- (German folklore) A mischievous elf or goblin, or one connected (and helpful) to a family or household.
- (fantasy literature) One of a diminutive and usually malevolent race of beings.