Finance Minister Lars Klingbeil has included in the 2027 budget a plan to tax digital assets at 25% regardless of the holding period.
Germany is preparing to dismantle one of Europe’s most favorable tax regimes for cryptocurrencies. Vice Chancellor and Finance Minister Lars Klingbeil has finalized a plan to abolish the tax exemption currently guaranteed to investors who hold digital assets for at least 12 months. The measure is included in the “Eckwertebeschluss” of the 2027 federal budget and is expected to be approved by the Cabinet during the week.
Under current rules, set out in Section 23 of the German Income Tax Act, cryptocurrencies are classified as “private assets.” Anyone who holds Bitcoin or other tokens for more than one year pays no tax on the sale. Under the Klingbeil plan, crypto would be treated on a par with stocks and funds, with capital gains taxed at a flat rate of 25% plus the solidarity surcharge and, where applicable, church tax, regardless of the holding period. The measure aims to close a 98 billion euro deficit in the 2027 budget, which also includes cuts to healthcare spending, welfare, and pensions, as well as new levies on alcohol, tobacco, sugar, and plastics.
This is not an unprecedented attempt. As reported in April 2025, the SPD had already put forward the same proposal during coalition negotiations, calling for the exemption period to be eliminated and the flat tax on private capital income to be raised to 30%. The CDU/CSU had blocked the initiative, which was excluded from the May 2025 coalition agreement that brought the Merz government to power. Klingbeil, who leads the SPD and now serves as Finance Minister, has reintroduced the measure in a different guise — no longer as a standalone tax increase, but as a component of a broader budget package. This marks the fourth attempt to eliminate the exemption in 18 months, after the three previous ones had failed.
The industry has responded with firm opposition. The Bitcoin Bundesverband, Germany’s leading industry association, has called the move “an obvious political trick”, arguing that the reform amounts to a disguised tax hike in direct contradiction with the relief promises contained in the coalition agreement. Constitutional law experts have raised doubts about the measure’s legal soundness: applying stricter rules exclusively to crypto while maintaining favorable treatment for comparable private assets could be challenged on the basis of the equality principle under German law.
Eric Demuth, co-founder of Bitpanda, called the plan “an extremely stupid decision”, citing Austria’s experience. In 2022, Vienna abolished a similar exemption, introducing a flat tax of 27.5% on crypto capital gains regardless of the holding period. According to Demuth, the measure produced more bureaucracy than revenue. No formal bill has yet been submitted to the Bundestag, and it remains uncertain whether protections will be introduced for assets already held.
