Germany's 2027 Budget Targets Crypto Tax Exemption, Eyes €2 Billion

Berlin plans to kill the one-year crypto tax exemption that made Germany a haven for long-term holders, replacing it with a flat 25% capital gains tax on all digital assets.

Finance Minister Lars Klingbeil announced on April 29 that the government plans to reclassify cryptocurrencies as financial securities. The practical effect: a flat 25% capital gains tax on digital assets, regardless of how long you've held them. That's a direct shot at Germany's current one-year tax exemption, the rule that lets holders sell crypto tax-free after 12 months.

Under the new rules, every sale of a digital asset would trigger a 25% capital gains levy, mirroring how traditional securities like stocks and bonds are already taxed.

Klingbeil's ministry expects this single change to generate an additional €2 billion in annual revenue.

The announcement came as part of Germany's 2027 draft budget, which projects total spending of roughly €543.3 billion, backed by approximately €196.5 billion in borrowing. Around €118.5 billion is earmarked for investment. Defense spending is projected to hit 3.1% of GDP in 2027, well above NATO's traditional 2% target. Germany has also committed €11.6 billion to support Ukraine's defense efforts.

The full cabinet draft is expected to advance in July 2026, with parliamentary approval targeted by the end of the year.

For traders who built positions around the one-year holding rule, the timeline matters. The tax change is part of the 2027 budget, not an immediate law. Anyone sitting on unrealized gains from coins bought before the rule change still has a window to sell tax-free, provided they hit the 12-month mark before the new regime takes effect. Klingbeil's office did not specify a grandfathering clause for existing holdings.

The reclassification also carries implications beyond tax. Treating crypto as a financial security would bring digital assets under the same custody, reporting, and anti-money-laundering rules that apply to stocks and bonds. German exchanges and custodians would need to adjust compliance frameworks, and the shift could push some retail activity toward decentralized platforms or foreign brokers that fall outside German jurisdiction.

The €2 billion revenue estimate assumes current trading volumes hold steady. If the tax change drives volume offshore, actual collections could fall short. The German crypto association has already signaled it will lobby parliament for a longer transition period.