The German federal government is pushing to increase taxes on profits from cryptocurrencies, with plans to generate billions of euros in additional revenue for the national budget. Berlin is now reconsidering the current one-year tax exemption on assets like Bitcoin and Ethereum, which has allowed long-term holders to avoid capital gains tax.
Crypto tax plans in the 2027 budget
According to the draft federal budget for 2027 and the fiscal plan extending through 2030, the government is projecting that measures to combat financial and tax crime, including crypto taxation, could inject an extra 1 billion euros into public revenue next year. The plan, prepared by the Ministry of Finance and approved by Chancellor Friedrich Merz’s cabinet, marks the first time the state is putting forward a concrete revenue expectation from the crypto sector.
BTC Echo notes that this figure in the budget closely aligns with the latest industry forecasts circulating in the crypto space.
Under the current rules in Germany, investors who hold cryptocurrencies for over 12 months before selling pay no tax on their profits. If the proposed changes go into effect, all capital gains from crypto sales would be taxed as investment income, regardless of how long the assets were held.
Part of a broader deficit reduction strategy
Eliminating the one-year holding rule for crypto profits forms part of a larger fiscal tightening program aimed at reducing Germany’s budget deficit. The Finance Ministry is prioritizing reductions in public subsidies and tax breaks, as well as a clampdown on financial and tax-related offenses.
Altogether, these measures are expected to contribute 6.2 billion euros to the 2027 budget. Of this, around 3 billion euros will result from removing various exemptions. New taxes on single-use plastics are projected to add 1 billion euros, higher tobacco taxes 0.8 billion euros, and increased alcohol taxes another 0.4 billion euros in extra funds.
| Category | Expected 2027 Revenue |
|---|---|
| Crypto taxation and related measures | 1 billion euro |
| Exemption removals | 3 billion euro |
| Single-use plastic tax | 1 billion euro |
| Tobacco taxes | 0.8 billion euro |
| Alcohol taxes | 0.4 billion euro |
Political debate and MiCA’s influence
The proposed changes are not yet finalized. The bill is expected to reach the German parliament for a first reading in early September and a second session in mid-December. Notably, the removal of the crypto tax exemption is sparking heated political debate. A similar initiative by the Greens previously failed to advance in the Bundestag.
Finance Minister Lars Klingbeil’s SPD party supports raising the tax burden on crypto assets. In contrast, Chancellor Friedrich Merz’s CDU-CSU alliance is generally skeptical about such reforms and appears less inclined to support the changes.
The timing coincides with the end of the European Union’s Markets in Crypto-Assets (MiCA) transition period, introducing a union-wide regulatory framework to expand and harmonize access to digital assets.
Mini glossary: MiCA is the European Union’s unified regulatory framework for crypto-asset service providers and issuers. Its goal is to standardize licensing and oversight rules across the union.
Germany currently leads Europe in issuing authorizations under MiCA, yet many crypto platforms still have not completed the licensing process.
In May, the German government introduced new obligations for crypto service providers to collect and forward user data to tax authorities. If this taxation plan is confirmed, the time-based tax advantage for local crypto investors will be coming to an end.
