Germany is considering taxing cryptocurrencies after the end of the annual exemption.

• Germany is considering a tax on cryptocurrency gains.
• Bitcoin may lose its tax exemption after one year.
• New rule could affect long-term investors.

Germany may implement one of the biggest tax changes for cryptocurrency investors in recent years. The federal government is considering revising the current tax exemption policy for digital assets held for more than 12 months, a measure that has transformed the country into one of the most favorable destinations for long-term Bitcoin investors.

The debate gained momentum after Finance Minister Lars Klingbeil confirmed that cryptocurrency taxation will be reviewed during the drafting of the 2027 federal budget. Although the final text has not yet been defined, industry professionals already consider it likely that the rule eliminating taxes on profits earned after one year of holding the assets will be discontinued.

Today, German law treats cryptocurrencies as private property, in line with assets such as gold and collectibles. Under the rule set out in Article 23 of the Income Tax Act, investors who hold Bitcoin and other cryptocurrencies for more than one year are exempt from capital gains tax.

The proposal under discussion could completely alter this structure. If the reform moves forward, gains obtained from cryptocurrencies could be treated similarly to stocks and ETFs, with taxation regardless of the asset's holding period.

In addition to immediate taxation on sales, the government is also studying stricter tax reporting rules for transactions involving cryptocurrencies. The possibility of taxing unrealized gains has also entered recent discussions among experts and authorities.

Proponents of the reform argue that Germany has failed to collect significant amounts of revenue in recent years. Blockchain researcher Co-Pierre Georg, director of the Blockchain Center at the Frankfurt School, estimates that the country may have lost around €11,4 billion in cryptocurrency-related tax revenue in 2024 alone.

Austria already implemented a similar policy in 2022, when it began applying a flat tax rate of 27,5% on cryptocurrency-related gains. The Austrian model is frequently cited during discussions in Berlin.

Representatives from the sector, however, are strongly opposed to the potential changes. Eric Demuth, CEO of Bitpanda, stated that the Austrian experience generated more bureaucracy and complexity, without a significant increase in tax revenue.

The German Bitcoin Association also criticized the proposal, arguing that the measure penalizes long-term investors. According to the organization, the plan represents an indirect tax increase aimed primarily at investors who follow current tax rules.

The German government is expected to present an official definition on the subject by the beginning of July.