Germany is preparing to revise one of Europe’s most favorable crypto tax frameworks, with Finance Minister Lars Klingbeil placing digital asset taxation at the center of the 2027 federal budget debate. The proposal targets the long-standing rule that allows investors to sell cryptocurrencies tax-free after holding them for more than one year.
For years, that exemption has shaped Germany’s reputation among long-term crypto holders. Under Section 23 of the Income Tax Act, digital assets fall under the category of private property, similar to gold or collectibles. Investors who hold assets such as Bitcoin for more than 12 months pay no capital gains tax upon sale.
That rule may not survive the next budget cycle.
Budget pressure brings crypto taxes into focus
Klingbeil confirmed during a late April presentation that the government intends to “tax cryptocurrencies differently” as part of a broader fiscal package. The plan sits inside the 2027 “Eckwertebeschluss,” a framework designed to address a budget gap estimated at €98 billion.
"Wir wollen Kryptowährungen anders besteuern" – Finanzminister Lars Klingbeil (SPD) gerade in der Bundespressekonferenz. Der Ehrliche dürfe nicht der Dumme sein
— Daniel D. Eckert (@Tiefseher) April 29, 2026
The proposal does not stand alone. It appears alongside spending reductions in health, pensions, and social welfare, as well as new levies on consumer goods such as tobacco, sugar, and plastic. Within that context, crypto taxation becomes one of several tools to increase revenue, with the government aiming to raise around €2 billion through the change.
The one-year holding rule has drawn attention because it offers a clear path to tax-free gains. Removing it would shift Germany closer to traditional capital markets, where profits face taxation regardless of holding period.
A shift toward stock-like taxation
Under the proposed framework, cryptocurrencies would no longer benefit from time-based exemptions. Gains could face a flat capital gains tax of around 25%, alongside additional surcharges where applicable.
Such a move would align digital assets with stocks and exchange-traded funds. Investors would pay taxes at the point of sale, even after long holding periods. Reporting requirements could also become stricter, especially as Germany expands oversight under European Union rules.
The country already enforces the Crypto Asset Tax Transparency Act, which requires service providers to share transaction data with authorities. That system operates under the EU’s DAC8 framework and has reduced opportunities for undeclared trading activity.
Industry pushback grows
The proposal has triggered resistance from industry groups and companies. Bitcoin Bundesverband criticized the plan and stated, “The political trick is obvious,” describing the reform as a disguised tax increase that conflicts with earlier promises of tax relief.
Opposition also came from Bitpanda leadership. Co-founder Eric Demuth pointed to Austria’s experience after a similar reform in 2022. He described the outcome as “an extremely stupid decision,” arguing that the policy increased bureaucracy without delivering meaningful revenue gains.
Austria removed its own tax-free holding period and introduced a 27.5% flat tax on crypto gains. The comparison now shapes the debate in Germany, where policymakers weigh potential revenue against market competitiveness.
Revenue expectations and policy risks
Supporters of reform argue that the current system leaves significant tax income uncollected. Co-Pierre Georg estimated that Germany may have missed around €11.4 billion in crypto-related tax revenue in 2024 alone.
Some policymakers have also explored taxing unrealized gains, although no formal proposal has been introduced on that front.
Legal concerns have also surfaced. Constitutional specialists have questioned whether stricter taxation for crypto assets, while other private assets retain favorable treatment, could face challenges under Germany’s equal-protection principles.
However, there is still uncertainty regarding transitional regulations. Lawmakers have not clarified whether existing holdings would retain their tax-free status under a grandfathering provision.
A repeated proposal returns under new framing
This is not the first attempt to remove the exemption. Similar proposals appeared during coalition negotiations in 2025, when the Social Democratic Party pushed for changes but faced resistance from conservative blocs. That version failed to enter the final coalition agreement.
Klingbeil has now reintroduced the idea within a broader budget package. The shift in framing may increase its chances of passage, since the measure ties directly to deficit reduction rather than standing as a separate tax reform.
No formal legislation has reached the Bundestag yet, but the cabinet is expected to finalize its position in the coming weeks.
Germany’s crypto position faces uncertainty
The outcome could reshape Germany’s standing in the European crypto landscape. The one-year exemption has long attracted investors who prefer long-term strategies without tax pressure.
Robin Thatcher, a cryptocurrency tax accountant, warned that removing the rule would “significantly weaken Germany’s pull as a crypto hub,” adding that other countries “should be copying this policy rather than Germany changing it.”
At the same time, traditional financial institutions continue to expand into digital assets. Banks such as DZ Bank, DekaBank, and LBBW have launched or developed crypto services under European regulatory frameworks, even as tax policy remains unsettled.
The final decision will determine whether Germany maintains its investor-friendly position or moves toward a stricter, revenue-focused model.
Gunel Ismayilova
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