Germany Moves to Scrap Crypto Tax-Free Holding Period From 2027

Germany's Federal Ministry of Finance (BMF) has drawn up a draft bill that would end one of the most attractive features of the country's crypto tax regime: the one-year holding period after which gains on Bitcoin and other digital assets become tax-free. The 16-page Referentenentwurf, obtained by BTC-ECHO, proposes reclassifying gains from Bitcoin, Ether and other "exchange crypto assets" (Tauschkryptowerte) as income from capital assets rather than private disposal transactions.

Under current German law, private investors who hold crypto for more than a year can sell it free of tax. The draft bill would remove that exemption entirely for newly acquired holdings, meaning disposal gains would become taxable regardless of how long the assets were held.

Timeline and transitional rules

The draft sets October 6 as the deadline for industry associations to submit comments, with a cabinet review scheduled for October 14. If the bill proceeds, the new rules would take effect in 2027, applying only to cryptocurrencies acquired after December 31, 2026. Assets already held before that cutoff would continue to be taxed under the current legal framework, preserving the one-year exemption for existing holdings.

The draft also introduces a mechanism for capital gains tax to be withheld automatically by crypto asset service providers, similar to how banks withhold tax on traditional investment income in Germany. According to the draft, this automatic withholding would begin in 2028, a year after the new tax classification itself takes effect.

What changes for investors

The practical effect of the reform, as drafted, is that investors acquiring crypto assets from 2027 onward would no longer be able to rely on the one-year rule to shield gains from tax. Instead, profits from disposing of Bitcoin, Ether or other exchange crypto assets would be taxed as capital income from the outset, mirroring the treatment already applied to dividends and interest in Germany.

For holdings acquired before the end of 2026, the transitional provision in the draft means the familiar rules persist: assets held for longer than a year can still be sold tax-free. This creates a clear dividing line in how German tax authorities would treat crypto assets depending on their acquisition date.

The draft has entered the consultation phase, with industry bodies now reviewing its provisions ahead of the October deadlines before it goes before the cabinet.