Germany Weighs Ending Crypto Tax Break in 2027 Budget Plan

Germany is reviewing changes to its cryptocurrency tax regime as it draws up the 2027 federal budget, raising the prospect that it could end a tax exemption for gains on crypto assets held for more than a year.

Crypto news outlet BeInCrypto reported on July 6 that Germany’s Federal Ministry of Finance included crypto tax changes in its monthly report as one of the fiscal consolidation measures tied to the 2027 budget.

Germany’s cabinet has approved the broad framework for the 2027 budget, setting spending at 543.3 billion euros and net borrowing at 110.8 billion euros.

As part of its fiscal consolidation plans, the government is pursuing structural savings of about 4 billion euros a year along with measures to raise additional tax revenue. Those measures include new levies on plastic and sugar, higher alcohol and tobacco taxes, stronger enforcement against tax crimes and changes to crypto taxation.

Under current German tax law, cryptocurrencies are classified as private assets. Individual investors who sell Bitcoin or other crypto assets after holding them for more than 12 months do not pay tax on capital gains.

If the holding period is less than a year, gains may be taxed at personal income tax rates of as much as 45%. Annual crypto trading gains below 1,000 euros are exempt.

Calls to scrap the one-year exemption have been growing since late last year. In a statement, the Seeheimer Kreis, a group within Germany’s Social Democratic Party, said future capital gains should be taxed consistently regardless of the holding period.

The industry has pushed back. Matthias Steger, a board member of the German Bitcoin Federation, said taxing every disposal could turn even routine payments into taxable events. He added that companies could relocate to more favorable jurisdictions such as Portugal.

Germany’s parliament has blocked a similar effort before. In May, the Bundestag’s finance committee rejected a Green Party proposal to abolish the one-year exemption.

The debate could extend beyond Germany to the wider European Union. BeInCrypto said Germany, as the bloc’s largest economy and an important country in approvals under the Markets in Crypto-Assets framework, or MiCA, could influence regulatory and tax discussions in other member states.

Among EU member states, Germany and Portugal are among the few countries that fully exempt capital gains on crypto assets held for more than a year. Austria scrapped the holding-period rule in 2022 and applies a flat 27.5% tax rate to newly acquired holdings.

With the Crypto-Asset Reporting Framework, or CARF, and DAC8 already in force as crypto tax reporting rules, ending Germany’s exemption for long-term holdings could reignite debate over crypto taxation across Europe.

BeInCrypto said the policy that helped make Germany favorable for long-term Bitcoin holders is now being tested by the government’s push to raise tax revenue.