Germany is preparing to overhaul its cryptocurrency tax regime, potentially eliminating the long-standing exemption that makes gains on digital assets held for more than one year entirely tax-free. Finance Minister Lars Klingbeil announced plans to reform virtual asset taxation as part of a broader package aimed at generating an additional 2 billion euros in revenue, with changes likely to take effect from 2027.
Under current rules, private crypto sales are subject to capital gains tax only if assets are sold within 12 months of purchase. Holdings that surpass this “Haltefrist” are completely exempt, a policy that has turned Germany into a favored destination for long-term crypto investors. The ministry’s 2022 guidance and a 2025 reaffirmation even extended this treatment to tokens involved in staking and lending, after earlier proposals for a 10-year taxable period were scrapped.
During an April 29 presentation of the 2027 federal budget, Klingbeil stated the government would “tax cryptocurrencies differently” but did not explicitly mention the one-year exemption. Nonetheless, the German Bitcoin Association and other industry bodies believe the holding period is the most obvious target for revenue increases. The association argues that eliminating the exemption would bring Germany closer to the tax practices of other major economies, like the United States and the United Kingdom, which tax crypto gains regardless of holding time.
Industry voices warn that such a move would weaken Germany’s appeal as a crypto hub. Crypto tax accountant Robin Thatcher told Cointelegraph that ending the tax-free disposal period would “significantly weaken Germany’s pull as a crypto hub” and suggested that other nations should be replicating the policy, not scrapping it. Bitpanda co-founder Eric Demuth criticized a similar reform in Austria, where capital gains tax now applies to all crypto sales, saying it created “hardly any additional benefit” while adding bureaucracy. According to Thatcher, Germany could end up with a flat tax rate near Austria’s 27.5% or align with the UK’s 24% top capital gains rate.
The reform would increase the administrative burden on taxpayers, who would need to track cost bases and holding periods meticulously. It could also prompt some investors to exit positions before the new rules take effect, potentially increasing short‑term selling pressure. International investors who chose Germany for its tax advantages might shift to other jurisdictions, though countries like Portugal and Switzerland have also tightened their own crypto tax rules.
Even as tax uncertainty grows, German banks are expanding their digital asset services. DZ Bank, the nation’s second-largest financial institution, received BaFin approval in January to launch a crypto trading platform under the EU’s MiCA framework. DekaBank and LBBW already introduced institutional-focused crypto offering in 2024. The eventual tax reform would apply against the backdrop of the EU’s DAC8 reporting regime, which since January requires crypto asset service providers to share detailed customer transaction data with tax authorities.
While no draft legislation has been published, the timeline indicates a lengthy legislative process with parliamentary debate and public consultation. Investors are advised to monitor developments closely and seek professional tax advice as Germany moves to end the era of tax‑free crypto gains for long‑term holders.
