Germany targets €2 billion with stricter crypto taxes and financial crime crackdown
Tax-Free Crypto Profits May Soon Be a Thing of the Past
German Finance Minister Lars Klingbeil plans to generate an additional €2 billion for state coffers by 2027 through the taxation of cryptocurrencies and a crackdown on tax and financial crime. The proposal was outlined in a key policy paper on budget and financial planning through 2030, presented on Wednesday.
Currently, Germany has a special rule: investors who hold cryptocurrencies for at least 12 months can cash in their profits tax-free. Sales made within a year, however, are subject to personal income tax—though gains under €1,000 remain exempt.
Klingbeil aims to boost state revenue through stricter tax audits and tougher penalties for tax evaders. Authorities are already scrutinizing crypto transactions completed within a year more closely.
A new EU directive, in effect since this year, requires providers to report transaction data, asset holdings, and user information. This makes it far harder to conceal crypto profits from tax authorities. Those who attempt to do so risk fines, and repeat offenders could even face imprisonment.
The biggest revenue source, however, could come from eliminating the tax-free holding period. Germany is already an outlier in Europe with its one-year "buy-and-hold" exemption. Yet the Finance Ministry has not specified how it intends to secure these additional tax revenues—referring only to an "adjustment in the taxation of cryptocurrencies" in the budget draft.
The proposal will now be debated in the Bundestag and Bundesrat. A concrete legislative draft is needed for any reform of crypto taxation, with details still under discussion. One possibility is taxing crypto gains like other securities—at a flat rate of 25% capital gains tax, plus solidarity surcharge and church tax.
It remains unclear whether the new rules will also apply to investors who already hold cryptocurrencies. A special provision for existing investors is possible. In Austria, for example, those who held crypto before the 2022 reform were exempt from the new tax. Previously, gains were tax-free after one year, but new investments are now subject to a 27.5% tax rate.
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