Klingbeil to End Germany’s One-Year Crypto Tax Exemption

Finance Minister Lars Klingbeil has included a proposal in the 2027 federal budget to abolish Germany’s one-year holding-period tax exemption for cryptocurrencies. The budget framework, known as the Eckwertebeschluss, is due for Federal Cabinet consideration this week.

Under current Section 23 of the Income Tax Act, cryptocurrencies are treated as private assets and sales of coins held more than 12 months are tax-free. Klingbeil’s proposal would treat crypto like stocks and funds, making gains taxable at the 25% flat capital gains rate plus the solidarity surcharge and church tax where applicable, regardless of how long assets are held.

The change is part of budget measures intended to address a projected €98 billion shortfall. The package also includes spending cuts in health, social welfare and pensions and new levies on alcohol, tobacco, sugar and plastic.

The Social Democratic Party proposed removing the holding-period exemption during coalition talks in 2025 and sought to raise the flat tax on private capital income to 30%, but coalition partners rejected that plan and it was omitted from the 2025 agreement. Klingbeil, who chairs the SPD and serves as finance minister, has reintroduced the reform inside the 2027 budget.

Industry groups and legal experts have objected. The Bitcoin Bundesverband described the proposal as “the political trick is obvious,” calling it a disguised tax increase. Eric Demuth, co-founder of exchange Bitpanda, called the plan “an extremely stupid decision,” citing Austria’s 2022 abolition of a similar exemption and saying that change created more bureaucracy than revenue.

Constitutional law specialists warned that applying stricter rules to crypto while preserving favorable treatment for other private assets could face challenges under Germany’s equal-protection principle. It is unclear whether the proposal would include grandfathering provisions to protect existing holdings; no formal bill has yet been introduced in the Bundestag.

At least four attempts have been made in the past 18 months to remove the one-year exemption; earlier efforts stalled. Supporters of the change argue embedding it in the 2027 budget could increase its chances of approval by linking multiple revenue and spending measures.

Cabinet consideration and parliamentary debate remain before any final rules are adopted, and lawmakers will decide whether to include transitional rules for current holders.