Germany Moves To Kill Its Bitcoin Tax Haven

Germany is preparing to dismantle one of Europe's most investor-friendly crypto tax rules. Finance Minister Lars Klingbeil has finalised a plan to abolish the country's one-year holding period exemption for $BTC and other digital assets, a move that would end a long-standing regime that attracted long-term crypto investors to Germany.

What Changes and When

Under current rules, set out in Section 23 of Germany's Income Tax Act, crypto is classified as a private asset, meaning investors who hold $BTC or other tokens for more than 12 months pay zero tax on disposal. That would end under the new proposal. Under the Klingbeil plan, crypto would be treated like stocks or funds, with gains taxable at Germany's 25% capital gains rate plus solidarity surcharge, regardless of holding period.

Rather than a standalone tax hike, the measure sits inside a broader 2027 budget package targeting a €98 billion deficit. The plan is expected to be passed by the Federal Cabinet this week. The government expects the change to generate around €2 billion in new annual revenue.

The SPD reportedly pushed to abolish the exemption last year as part of coalition negotiations. When the CDU/CSU pushed back, the proposal was dropped from the coalition agreement. Embedding the measure inside the budget package makes it significantly harder to block than previous standalone attempts, marking the fourth effort to scrap the exemption in 18 months.

Industry and Legal Pushback

Germany's main crypto industry body, the Bitcoin Bundesverband, opposes the change, framing it as a disguised tax hike that runs counter to earlier coalition promises of relief. The organisation also warns that the changes would cost Germany its competitive edge in the European crypto landscape, with companies, developers, and startups potentially relocating to other jurisdictions.

Constitutional law specialists have flagged that applying stricter rules specifically to crypto while preserving favourable treatment for comparable private assets could face scrutiny under Germany's equal-protection principle. That opens the door to a legal challenge if the budget passes as drafted.

The tax debate also comes as Germany prepares for broader crypto reporting under the EU's DAC8 regime. Bitpanda co-founder Eric Demuth has called the plan an extremely stupid decision, pointing to Austria's 2022 abolition of a similar exemption as a cautionary example, arguing the change produced more bureaucracy than revenue.

Sources:
Cryptopolitan: Germany's Klingbeil revives SPD plan to end crypto tax exemption in 2027 budget
CoinTelegraph: Germany signals 2027 crypto tax overhaul, one-year holding perk under threat
ETHNews: Germany to end Bitcoin holding period tax exemption in 2027 budget reform