Germany plans to end crypto tax-free holding period

Berlin intends to raise €1 billion a year from German crypto investors by scrapping the tax-free holding period for long-term positions. That figure appears in the draft federal budget for 2027, the finance ministry document released this week shows. The cabinet of Chancellor Friedrich Merz has already approved the plan.

The change would close the current exemption: profits from selling Bitcoin (BTC) or Ethereum (ETH) held more than 12 months are now tax-free. Under the proposal, all crypto gains would be treated as capital gains, taxable no matter how long the asset is held.

The €1 billion target is part of a broader €6.2 billion fiscal consolidation package for 2027. The government expects €1 billion from a new plastics tax and another €800 million from higher tobacco levies. Alcohol duties add €400 million, the document shows.

German crypto news outlet BTC Echo, citing sources familiar with the budget preparation, noted the €1 billion figure roughly matches estimates that have recently circulated inside the industry.

The proposed reform is not yet law. The draft must still pass the Bundestag. A first reading is expected in early September, with a second reading in mid-December. Political lines are already drawn. Finance Minister Lars Klingbeil's Social Democratic Party (SPD) supports a higher crypto tax burden. Merz's center-right CDU/CSU alliance has generally opposed the change. A previous bill from the Greens that aimed to impose a similar rule was halted in the Bundestag.

The tax push comes as Europe's MiCA regulation reaches full enforcement. The transitional period for licensing expired recently. Germany has issued the most MiCA licenses of any EU member state. In May, the government also introduced a requirement for crypto service providers to collect and submit user data to the tax authority.

For German investors, the practical effect is a higher cost of holding long-term. The one-year holding period has been a structural feature of the market, encouraging buy-and-hold strategies. Its removal would eliminate a tax advantage that made German retail less likely to trade frequently for the first year. The new regime would apply to future sales, though the start date depends on the legislative outcome.

What confirms the move The most concrete signal will be a successful first reading in September without major amendments. If the coalition holds together and the CDU/CSU does not block the bill in committee, the December second reading is likely to pass. The budget target of €1 billion is already baked into the fiscal plan, which gives the finance ministry a strong incentive to see it through.

What would weaken the case A collapse of the coalition over the broader budget package could stall the crypto tax change. The CDU/CSU has historically resisted higher capital gains taxes on crypto. If the Greens' earlier bill failed, this one is not guaranteed. A material amendment that reduces the scope – such as retaining the exemption for amounts under a certain threshold – would also change the revenue projection.

The first concrete milestone is the September reading. If the draft emerges largely intact, the market should price in the assumption that the exemption ends in 2027. Until then, German long-term holders have a window to act under current rules.