The German federal government has officially included a review of digital asset taxation in its draft budget for 2027. This concerns the potential abolition of a key exemption that relieves investors from paying capital gains tax on cryptocurrency sales after a one-year holding period. This is explicitly stated in the monthly report of the Ministry of Finance, published as part of budget consolidation measures.
The ruling coalition has agreed on strict parameters: a government spending limit set at €543.3 billion with net borrowing of €110.8 billion. To cover the deficit, annual savings of around €4 billion are planned, along with a package of revenue initiatives. These include new levies on plastic and sugar, higher excise duties on alcohol and tobacco, intensified efforts to combat tax violations, and, critically for us, a revision of the cryptocurrency tax regime.
Why the Exemption is at Risk: Government Stance and Industry Reaction
Let me remind you of the current rules: in Germany, cryptocurrency is recognized as private property (Section 23 of the Income Tax Act). Income from its sale is tax-free if the asset was held for more than 12 months. For sales before this period expires, a progressive tax rate of up to 45% applies. There is also a tax-free limit of €1,000 in total annual profit.
However, pressure from lawmakers has intensified. A document from the Seeheimer Kreis working group (SPD) explicitly states: "In the future, capital gains income should be taxed regardless of the holding period." Representatives of the crypto industry, particularly Matthias Steger, a board member of the Bitcoin Association Bundesverband, are raising the alarm. He rightly points out that by taxing every sale, authorities would turn ordinary payments into taxable events, forcing businesses to migrate to more favorable jurisdictions, such as Portugal.
Notably, the Bundestag has previously rejected similar initiatives. In May 2026, the finance committee rejected a similar proposal from the Green Party. But the situation has now changed: the issue is tied to budget discipline.
A Signal for All of Europe
Germany is the EU's largest economy and a leader in the number of approved MiCA licenses. Its tax policy traditionally serves as a benchmark for other countries in the region. If Berlin abandons this unique exemption, it will change the tone of discussions in Brussels and other capitals. Currently, a full exemption from cryptocurrency income tax after one year of holding is only in effect in Portugal. Austria already abandoned this practice in 2022, introducing a flat tax of 27.5%.
My analysis: The initiative appears to be part of a broader European trend toward tightening fiscal control over digital assets within the framework of implementing CARF and DAC8 standards. If Germany goes down this path, it will be a serious blow to the region's attractiveness for long-term BTC holders. The fate of the regime that made Germany one of the most friendly jurisdictions for Bitcoin now depends on how much tax lawmakers plan to collect with its help. Investors should prepare for new realities.