Germany has officially included the issue of cryptocurrency taxation in its draft budget for 2027. This concerns the potential abolition of a key exemption that frees investors from capital gains tax after holding digital assets for one year.
The Federal Ministry of Finance disclosed the details in its monthly report. The revision of the cryptocurrency taxation regime is part of a comprehensive budget consolidation package approved by the ruling coalition. The Cabinet of Ministers has agreed on the main parameters of the 2027 budget, setting a government spending limit of €543.3 billion with net borrowing of €110.8 billion.
The main burden of balancing the budget falls on austerity measures. The coalition has agreed on savings of approximately €4 billion annually, as well as a package of revenue-increasing initiatives. These include new levies on plastic and sugar, higher excise taxes on alcohol and tobacco, stricter enforcement against tax violations, and, most importantly for us, a revision of the cryptocurrency taxation procedure.
What is the essence of the current exemption and why do they want to abolish it?
Currently, in Germany, cryptocurrency is classified as private property (Article 23 of the Income Tax Act). Profit from its sale is tax-free if the coins have been held for more than 12 months. For sales within the first year, an income tax rate of up to 45% applies. There is also a tax-free limit of €1,000 on total annual profit from all transactions.
Discussions about the need to abolish these concessions intensified after 2025. Documents from the Seeheimer Kreis working group (SPD faction), cited by the German Bitcoin Association Bundesverband, explicitly state: "In the future, capital gains income should be taxed regardless of the holding period."
Industry participants have strongly opposed this. Matthias Steger, a board member of Bundesverband, rightly notes that if every sale is taxed, ordinary payments become taxable events, and businesses will start moving to more favorable jurisdictions, such as Portugal. Notably, parliament has previously resisted such initiatives — in May 2026, the Bundestag's Finance Committee rejected a similar proposal from the Green Party.
A signal for the entire European Union
The significance of this issue extends far beyond Germany itself. It is the EU's largest economy and a leader in the number of approved MiCA licenses. Its regulatory approach often serves as a model for other countries in the region. A full exemption from cryptocurrency income tax after one year of holding currently exists only in Portugal. Austria abandoned such an exemption back in 2022, introducing a flat tax of 27.5% on all new investments.
Germany's influence is particularly noticeable now. One in four investors in Europe already owns cryptocurrency, and new tax reporting rules under the CARF and DAC8 systems have come into effect. If Berlin abandons the exemption, the tone of discussions in Brussels and other capitals could change dramatically.
The outcome will become clear when the bill is submitted to the Bundestag for consideration. The fate of the regime that made Germany one of the most Bitcoin-friendly countries in Europe now depends on how much tax revenue lawmakers expect to collect through it.
Expert opinion: This step is a classic example of the conflict between fiscal necessity and promoting innovation. Abolishing the exemption could lead to capital outflow and reduce Germany's attractiveness as a crypto hub, especially compared to more favorable jurisdictions. The market should closely monitor developments, as the precedent could influence tax policy across the entire MiCA region.