Berlin is considering canceling the one-year capital gains tax exemption for cryptocurrencies starting in 2027. The goal is an additional €2 billion for the budget. The price is the reputation of one of the most attractive jurisdictions for long-term holders in Europe.
What Is Now and What May Change
Current German law gives private investors a full exemption from capital gains tax on cryptocurrencies if they hold the asset for more than one year. Buy, wait, sell after a year and a day — and all the gains stay with the investor. This rule also applies to coins used in staking and lending.
Finance Minister Lars Klingbeil stated at a press conference on April 29 that the government intends to “tax cryptocurrencies differently.” He did not specify the mechanisms but did state the goal: an additional €2 billion in crypto revenue for the 2027 budget.
The German Bitcoin Association and tax consultants agree: the only way to extract such a volume is to cancel or shorten the one-year preferential period. There are simply no other tools in German crypto regulation capable of generating comparable sums.
Austria as a Warning
There is a documented precedent for this story. In 2022, Austria canceled a similar exemption and switched to taxing crypto gains as ordinary capital income — regardless of the holding period. The rate was 27.5%.
Bitpanda co-founder Eric Demuth, whose company is based in Vienna, later called this decision “extremely stupid.” According to him, the reform created additional bureaucratic burdens for users and platforms, while the fiscal effect turned out to be minimal. He sees the Austrian experience as a direct warning to Germany.
Tax consultant Robin Thatcher calculated: if Germany adopts a similar model with a flat rate of 27.5%, it would put it “roughly in line with Austria” and “not far” from the UK with its 24% capital gains tax. The structural competitive advantage will disappear immediately.
Fiscal Motive in a Deficit Budget
The context of the decision is important. The crypto tax proposal is packaged in a €98 billion deficit reduction budget, alongside cuts to healthcare, pensions, and excise taxes on alcohol and tobacco.
Thatcher pays special attention to this:
“Packaging matters. Investors and entrepreneurs notice when they are lumped together with so-called ‘sin taxes.’ It shows how the state perceives this asset class.”
A Bitpanda representative assessed the potential increase as “negligible” — about 0.02% of the federal budget. In the company’s opinion, the ratio of fiscal effect to reputational damage is clearly not in favor of the reform.
Outflow to Offshore as a Real Scenario
OKX Europe CEO Erald Guse warned that the reform will deal a blow to competitiveness and the pace of crypto adoption “in one move” and will direct users to offshore platforms that are not required to comply with MiCA requirements.
This is a fundamental argument. MiCA created a regulatory base that was supposed to make European jurisdictions more attractive for the legal crypto market. If tax policy simultaneously pushes users into unregulated space, regulatory progress is partially devalued.
Thatcher put it bluntly: other jurisdictions should copy the German rule, not Germany cancel it.
DAC8 as Parallel Tightening
Simultaneously with the tax discussion, Germany implemented the European DAC8 directive through the Crypto Asset Tax Transparency Act. Since January, crypto services are required to transmit detailed client transaction data to the Federal Central Tax Office and other European regulators.
This sharply narrows the possibilities for undeclared trading. Tightening reporting itself is a logical step toward transparency. But combining it with the possible cancellation of the preferential period creates a situation where the state knows about all transactions and taxes them regardless of the investment horizon.
For long-term holders who built their strategy specifically according to German rules, this is a double blow. Data on their assets is already being collected. The benefit for which they held assets may disappear retroactively by 2027.
No Decision Has Been Made Yet
The German Ministry of Finance did not respond to requests for details of the reform. The specific mechanism of changes — whether it will be a complete cancellation, a reduction of the period to two or three years, or the introduction of partial taxation — has not yet been specified.
The industry has time for lobbying and public discussion. The Austrian precedent gives arguments to both sides: governments seeking revenue and the industry warning of consequences. Which of these lessons Berlin will choose to adopt will become clear during the 2027 budget process.
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