Germany, Bitcoin (BTC) Tax Law Reform Initiated...Will Long-Term Holding Tax Exemption End?

▲ Germany, Bitcoin (BTC)

Germany is attempting to revise its tax exemption system for long-term holdings of Bitcoin (BTC).

The cryptocurrency YouTube channel Coin Bureau reported in a video uploaded on September 1st (local time) that the German government is pushing to abolish the current system that exempts capital gains tax on cryptocurrencies held for more than 12 months. Article 23 of the German Income Tax Act states that if cryptocurrencies are sold after being held for more than one year, no capital gains tax is imposed. The German Federal Fiscal Court also classified cryptocurrencies as private assets, like gold and foreign currency, in February 2023. However, the federal budget draft unveiled by Finance Minister Lars Klingbeil in July included a plan to tax cryptocurrency profits regardless of the holding period. Klingbeil stated that additional tax revenue could amount to billions of euros.

The tax law revision process is still in its initial stages. As of the video's production, no bill to amend Article 23 of the Income Tax Act had been submitted. The current 12-month tax exemption rule remains in effect. The implementation date and whether existing assets will be protected have also not been decided. Coin Bureau pointed out that the estimated tax revenue was reflected in the budget even before the relevant laws were created. German tax expert Ingo Holl stated that if only cryptocurrencies are to be excluded from the private asset regulations, the reasons why gold and foreign currency maintain their one-year tax exemption benefits must also be explained.

The transaction information reporting system was activated before the tax law revision. As of January 1st this year, Germany has applied the EU DAC8 directive and the OECD's Crypto-Asset Reporting Framework (CARF). Domestic and international cryptocurrency exchanges providing services to German residents must collect tax identification numbers, transaction details, and balances. This information is transferred to the German Federal Central Tax Office. The first official submission deadline for information collected this year is July 31, 2027.

The banking sector's cryptocurrency business is rapidly expanding. DZ Bank launched a service in January this year that allows trading of Bitcoin, Ethereum (ETH), Litecoin (LTC), and Cardano (ADA). It was reported that more than 71% of approximately 650 regional cooperative banks have expressed their intention to provide related services. The German savings bank network is also gradually introducing Bitcoin and Ethereum trading. This network has approximately 50 million individual customers.

The additional amount of Bitcoin that the German government could acquire is also drawing attention. In 2024, the government of Saxony secured approximately 2.6 billion euros by selling 49,858 BTC seized at an average of 52,000 euros. In the ongoing movie2k trial this year, the option of the defendant transferring access to approximately 57,000 BTC to the government was discussed. The combined value of existing proceeds from sales and potentially additional acquired assets is estimated to be up to 6.2 billion euros. Meanwhile, a federal parliamentary petition demanding the retention of the 12-month tax exemption rule garnered more than 38,000 signatures in its first week of public availability.

[Article Key Summary]

-The German government is pushing to abolish the tax exemption rule that applies to cryptocurrencies held for more than 12 months.

-Although the tax law amendment bill has not yet been submitted, a system for reporting cryptocurrency transaction information to tax authorities has been implemented since this year.

-Germany sold 49,858 BTC in 2024 and may acquire an additional approximately 57,000 BTC depending on the outcome of a trial.

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