Germany Weighs Ending One-Year Crypto Tax Exemption in 2027 Budget Plan

Germany is considering a major overhaul of its cryptocurrency tax rules as part of its 2027 federal budget, a move that could eliminate the long-standing tax exemption for crypto assets held for more than one year.

The proposal appears in the German Federal Ministry of Finance’s latest monthly report, where cryptocurrency taxation is listed among the government’s budget consolidation measures. The cabinet has approved key figures for the 2027 budget, setting total spending at €543.3 billion and net borrowing at €110.8 billion. To strengthen public finances, the ruling coalition aims to generate around €4 billion in annual structural savings, supported by new revenue measures.

Alongside higher taxes on alcohol, tobacco, plastics, and sugary products, as well as tougher enforcement against tax evasion, the government is evaluating changes to Germany’s crypto tax framework.

Under current German law, cryptocurrencies are treated as private assets under Section 23 of the Income Tax Act. Investors pay no tax on crypto gains if they hold their assets for more than 12 months. However, profits from assets sold within a year are taxed at personal income tax rates of up to 45%, while annual gains below €1,000 remain exempt.

Pressure to remove the one-year tax exemption has increased since late 2025. Members of the SPD’s Seeheimer Kreis have argued that capital gains should be taxed consistently regardless of how long an asset is held.

The crypto industry has strongly opposed the proposal. Matthias Steger, a board member of the Bitcoin Bundesverband, warned that taxing every crypto transaction could make even small payments taxable events and encourage investors and businesses to relocate to more crypto-friendly jurisdictions such as Portugal.

Germany’s parliament has rejected similar proposals before, including a Green Party initiative in May 2026. However, the latest budget plan signals renewed momentum for reform.

The decision could have wider implications across Europe. Portugal remains the only other EU country offering a full one-year crypto tax exemption, while Austria already taxes new crypto holdings at a flat 27.5%. As the EU’s largest economy and a leader in MiCA licensing, Germany’s approach to crypto taxation could influence future regulatory and tax policies across the bloc, especially as CARF and DAC8 reporting rules take effect.