The German federal government plans to provide billions of euros of additional revenue to the budget by taxing gains from crypto assets at a higher rate. The Berlin administration is considering removing the tax exemption applied if assets such as Bitcoin and Ethereum are held for more than a year.
Crypto tax target in 2027 budget
In the 2027 federal budget draft and the financial plan extending until 2030, the “fighting against financial and tax crimes” and “crypto taxation” item are expected to contribute 1 billion euros to public revenues next year. The draft, prepared by the German Ministry of Finance and approved by the cabinet of the Prime Minister Friedrich Merz government, reveals a concrete income expectation in this field for the first time.
BTC Echo states that this figure in the budget generally coincides with the predictions spoken in the crypto industry recently.
In current practice, investors in Germany do not pay taxes on the profits they make if they sell privately held crypto assets 12 months after purchasing them. If the new regulation comes into force, the gains from these sales are planned to be taxed as capital income, regardless of the holding period.
Part of a plan to reduce the budget deficit
The removal of the one-year holding rule on crypto assets is part of a broader fiscal tightening package aimed at reducing Germany’s budget deficit. The Ministry of Finance lists the reduction of public supports and tax exemptions and the strengthening of the fight against financial and tax crimes among the central elements.
The planned measures are expected to contribute a total of 6.2 billion euros to the 2027 budget. It is estimated that approximately 3 billion euros of this will come from the removal of various exemptions. It is anticipated that the new tax on single-use plastics will create additional revenue of 1 billion euros, higher taxes on tobacco products will generate 0.8 billion euros, and the increase in alcohol products will create additional revenue of 0.4 billion euros.
| Pen | Expected revenue for 2027 |
|---|---|
| Crypto taxation and related measures | 1 billion euros |
| Removal of exemptions | 3 billion euros |
| Single-use plastic tax | 1 billion euros |
| tobacco taxes | 0.8 billion euros |
| alcohol taxes | 0.4 billion euros |
Political debate and MiCA impact
The regulation has not been finalized yet. The bill is expected to come to the agenda of the German parliament for the first time in early September and for the second time in mid-December. However, the removal of tax exemption is among the controversial topics in German politics. A similar initiative previously proposed by the Greens failed to advance in the Bundestag.
SPD, the party of Finance Minister Lars Klingbeil, supports increasing the tax burden on crypto assets. On the other hand, the CDU/CSU alliance, led by Chancellor Friedrich Merz, generally remains distant from these changes.
This step coincided with the end of the transition period of MiCA, the European Union’s Crypto Asset Markets regulation. MiCA is a common framework that aims to expand regulated access to digital assets across the European Union.
Mini dictionary: MiCA is the European Union’s common regulatory framework for crypto asset service providers and issuers. The aim is to harmonize licensing and oversight rules across the union.
Germany is the country that has granted the most authorizations under MiCA so far; However, many crypto platforms have still not completed the licensing process.
In May, the German government obliged crypto service providers to collect user data and forward it to the tax administration. If the new tax plan is adopted, the holding period-based tax advantage will end for crypto investors in the country.
