Since the puppy learned this young by being allowed to have access to the chickens.... to undo this is going to take a LONG time, like 6 months or more. It might be possible that he'll never get over it.
The most important thing in training with the chickens is to NEVER have the dog catch one. To have the dog catch 3 first before any training has started, you may need to hire a professional to handle this.
There's a lot of things working against you here...
He's a GSD... if they're not easy to train from the get go, they're not going to be for a very long time. You said you got after him the first two times, and really got after him on the 3rd time. If he was going to be easy to train, that first time you got after him would have made the point. Since it didn't by the third time, it's time to change tactics to suit his learning curve.
He was "allowed" to get to the chickens, making the training 10x's more difficult because you have to undo and retrain instead of just train.
He's never going to forget how much "fun" it was. You'll never be able to trust him again. There is a chance when he's like 7 years old... but I wouldn't plan on it.
Something needs to be done to protect the chickens, each time it happens, it reinforces the dog's behavior. Each time will make it harder to retrain him.
With a GSD... the dead chicken on the neck thing could go one of 2 ways... totally insulted and disgusted and they won't go near another chicken... or prancing around the yard quite happy with it and rolling into it with a shoulder. Shepherds are either "prissy" or down right gross. I have one of each... Ricca's nickname is "Scuzz-bucket"... she gets SO gross, be it muddy water or icky things she's found. Logan... total opposite. The rest of the Shepherds I've had liked to be clean. But not Ricca.
To start though, you need to spend an hour a day working with him, split into 3 20 minute intervals to start. Start with basic obedience, and do it near the chickens. Use a leash... he's not going to listen otherwise. You might need a training collar to help you. If you're not sure how to work with him, get a book or hire someone to help you. There's a lot of details to it that would make this post way long.
After 2 weeks you should see some improvement... increase training sessions 5 minutes longer every week after the first two. Every day until he's solid on it and you've seen him respect you more.
But still don't trust him with the chickens... you're on prevention now, and the only way to do that with him is to keep him away from them unless he's on leash and with you.
My dogs can see/smell/watch my chickens, but they can't get to them. When they jumped at them at the fence line, I got after them. That settled it because of all the previous training I had done with them. But knowing how they are... I don't take them ignoring the chickens as them being ok with chickens. All it means is that I'm around and they don't want to get in trouble, so for them it's easiest to put the chickens out of mind. But if they were loose, and I was gone, and they're not MY chickens, they'd be on them in a hot second. Ricca never went after MY cat, but she went after all other cats. She didn't go after MY orphan baby squirrel, but she's unforgiving to wild squirrels. So she most likely wouldn't bother my chickens, but the neighbors chickens would be fair game.
Have you worked with your dog on personal space and ownership of items? It starts with playing tug, and having him give you the toy, no questions asked, when you ask him to drop it or give it. Food... he's to step away from it and give it to you when you ask him. He has to work for everything you give him, and you can take it back from him at any time. This is how he'll learn the chickens are YOUR's.
If you're set on keeping him, you need to put the time in on training him. He's not going to learn it on his own, and a butt-whooping didn't work either, so you have to get into his head and establish your role as "pack leader" through training. It'll be a long process... but if you really dedicate the time you'll get one heck of a dog out of it, and he might become trust worthy with the chickens after all. But not for a year or more... since he knows the fun of catching them.
