Germany aims to collect billions in crypto tax by abolishing key exemption
The federal government of Germany is expecting several billion euros in additional revenue from increased taxation of cryptocurrency profits.
The tax reform ending an attractive exemption coincides with the full enforcement of Europe’s MiCA law, which should expand regulated access to digital assets.
Germany to scrap one-year crypto holding period
The executive power in Berlin intends to raise at least a billion euros a year more from German crypto investors, local media revealed.
That’s evident from the draft federal budget for 2027 and the financial plan through 2030 prepared by the Bundesministerium der Finanzen (BMF).
The proposal, excerpts of which were published by the finance ministry this week, has already been approved by the cabinet of Chancellor Friedrich Merz.
It unveils that “combating financial and tax crime and introducing crypto taxation” should contribute €1 billion to the state coffers next year.
While it does not provide a detailed breakdown, the document produces a concrete figure for the first time, the BTC Echo portal noted in an article on Wednesday.
Quoting sources familiar with its preparation, the leading German crypto news outlet also noted that the BMF expects these budget receipts to reach €1 billion this decade (over $1.14 billion) and remarked:
“This figure roughly corresponds to estimates that have recently been circulating in the crypto industry.”
The government’s scheme boils down to getting rid of a tax exemption for long-term investments in cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH).
Profits resulting from the sale of such assets more than 12 months after their initial acquisition have been tax-free for crypto traders in Germany until now.
Crypto investments fall victim to fiscal consolidation
Berlin’s intention to scrap the one-year holding period for coins is part of a larger fiscal consolidation package designed to shrink the Bundesrepublik’s budget deficit.
The BMF makes it clear that the reduction of state-provided financial aid and tax breaks, while boosting the fight against financial and tax crime, is a central part of the planned measures.
All of them are projected to bring around €6.2 billion (over $7 billion) in total to the 2027 federal budget. Some €3 billion is expected to come from abolishing exemptions like this.
A new tax on disposable plastics should generate another €1 billion, while higher levies on tobacco and alcohol products will account for €0.8 billion and €0.4 billion respectively, the report detailed.
Tax reform stirs controversy in German politics
According to the government’s initiative, proceeds from the disposal of privately held crypto funds will be considered income from capital gains.
Thus, all profits from the sale of Bitcoin and the like will become taxable in the future, regardless of how long the assets have been held by the investor.
The proposed reform is yet to be finalized and approved by German lawmakers. The first reading of the draft is likely to take place in early September and the second in mid-December.
The push comes against the backdrop of the recent expiry of the transitional period for the implementation of the EU’s Markets in Crypto Assets (MiCA) regulation.
The comprehensive pan-European framework is expected to eventually expand regulated access to digital assets across the 27-member European Union, although this is not the case yet.
In fact, many crypto platforms are yet to obtain licenses, including major market players. Germany has so far issued the most authorizations under MiCA.
In May, its federal government introduced a new requirement for crypto service providers to collect and submit user data to the country’s tax authority, as reported by Cryptopolitan.
Meanwhile, the abolition of the holding period exemption is proving politically controversial in the Federal Republic, where a bill designed to impose it was already halted in the Bundestag. It was put forward by the Greens.
While the Social Democratic Party (SPD) of Finance Minister Lars Klingbeil, the junior partner in the ruling coalition, supports an increase in the crypto tax burden, the center-right CDU/CSU alliance of Chancellor Merz has generally opposed the proposed changes.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
