The information provided in this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry a high degree of risk.
Germany’s one-year rule is the best-known crypto tax rule in Europe: hold a coin for more than twelve months, sell it, owe nothing. Since the German cabinet’s 2027 budget decision, one sentence has appeared in almost every report about its future: crypto gains will be taxed like stock gains. That sentence is wrong twice over, and both errors can be checked against documents anyone can download.
It is wrong first because, as of 12 August 2026, there is no law and not even a ministry draft on crypto taxation. It is wrong second, and this matters far more, because two entirely different models are circulating. On a €100,000 gain held for more than twelve months, the two models are €21,100 apart. Which one ends up in the statute book is genuinely open, so anyone talking about “the” German reform is talking about nothing in particular.
Key facts at a glance
- As of 12 August 2026 there is no law and no ministry draft on crypto taxation. The working draft of Germany’s Annual Tax Act 2026, published on 13 July 2026, contains no crypto provision at all.
- Two models are in circulation: moving crypto into capital income under section 20 of the Income Tax Act (cabinet decision of 6 July 2026), and keeping it in section 23 but deleting the one-year rule (bill 21/5752 of 5 May 2026).
- On a €100,000 gain that is €26,375 versus up to €47,475, a difference of €21,100.
- The bill was rejected in the finance committee on 20 May 2026. Only Die Linke voted for it; the conservatives, the AfD and the Social Democrats voted against.
- Under that bill, gold, antiques, artworks, historic vehicles and foreign currency keep the one-year rule explicitly. Exactly one asset class is carved out.
- Revenue estimates range from roughly €300 million to €11.4 billion a year. That is a factor of 38.
How the German rule works today
Under section 23 of the German Income Tax Act, crypto assets count as “other economic goods”. A private sale is taxable only if fewer than twelve months passed between purchase and disposal. Sell earlier and the gain is added to your ordinary income at rates up to 45% plus the solidarity surcharge. Sell later and the gain is not taxed at all.
One detail matters for the debate that follows: this is not a preferential crypto regime that someone invented for Bitcoin. It is the general rule for privately held assets such as physical gold or a classic car, and Germany’s Federal Fiscal Court confirmed in February 2023 that crypto falls under it (case IX R 3/22).
Nothing about that has changed. Whatever comes next, the documentation burden lands on the taxpayer, which is why acquisition records are the practical bottleneck in every scenario. Tools that produce a German-compliant tax report are listed in our crypto tax software comparison.
Model 1: capital income under section 20
This is the finance ministry’s line. Crypto would be lifted out of private disposals and treated like interest, dividends and stock gains, at the flat withholding rate of 25% plus the 5.5% solidarity surcharge on that tax, giving 26.375%. Add church tax and the burden lands near 28%, depending on the federal state.
No legal text exists for this model. Not a draft, not a paragraph. Everything written about it rests on a budget document and on the finance minister’s public statements. That leaves open exactly the questions that decide the real burden: whether the €1,000 saver’s allowance would apply, how losses could be offset, and whether crypto exchanges would become paying agents that withhold tax at source.
Model 2: staying in section 23, without the deadline
This model has one advantage over the first: it exists as finished statutory language. The bill from the Green parliamentary group carries the number 21/5752, is dated 5 May 2026, and is titled, in translation, a bill “to close a fairness gap in the taxation of crypto assets”.
Article 1 number 1 inserts a new sentence into section 23:
“The one-year deadline in sentence 1 does not apply to disposals of crypto assets.”
Crypto would remain an “other economic good”. The explanatory memorandum states the consequence plainly: gains would be taxed “regardless of the holding period, on disposal, at the personal income tax rate”. Depending on other income, that is up to 45% plus the solidarity surcharge.
The bill was rejected in the finance committee on 20 May 2026. Only Die Linke supported it. The Social Democrats, who share the goal, voted against it because they wanted to wait for their own finance minister’s proposal. That makes the text dead as a vehicle but very much alive as a blueprint: it is the only fully drafted statutory language anyone has produced on this question.
The comparison: €21,100 on the same gain
The following assumes a sale with a €100,000 gain after more than twelve months, no church tax, and no other private disposals in the same year.
The gap between the ministry’s model and the drafted bill at the top rate is therefore €21,100 on an identical gain.
One detail almost every summary omits: the solidarity surcharge behaves differently in the two models. On the flat withholding tax it is levied without any threshold. On assessed income tax it only kicks in above a threshold that most taxpayers no longer cross. At the 42% and 45% marginal rates assumed above the threshold is comfortably exceeded, so the surcharge applies. On smaller gains and lower other income the arithmetic changes, which is precisely why the blanket claim “crypto is about to get more expensive” is worth so little.
Three ways the bill is worse than stock taxation, not equal to it
The rate. Stock gains face 25% plus surcharge. The bill applies personal rates up to 45% plus surcharge. That is not parity; it is a penalty of up to 21.1 percentage points.
Loss offsetting. Losses from private disposals under section 23 may only be netted against gains from other private disposals. They sit in their own narrow bucket and cannot be set against interest or dividends. Under the section 20 model, crypto losses would join the much wider capital-income bucket.
Withholding. Section 23 has no withholding mechanism by design. Every single disposal has to be declared, with acquisition date, cost basis and proceeds. The section 20 model could in principle withhold at source, but only through a domestic paying agent. How that would work for exchanges based elsewhere in the EU appears in neither document.
Gold, art and classic cars keep the one-year rule
The most revealing passage of the bill is not in the statutory text but in the reasoning, where the drafters explain why singling out crypto is justified:
“The provision is appropriate because other economic goods such as physical gold, antiques, artworks, historic vehicles or foreign currencies are used for speculative gains to a considerably lesser extent.”
So the bill does not clean up the system. It removes one asset class and justifies that with an assumption about how investors behave. That is where the constitutional exposure sits: Germany’s Article 3 equality clause requires an objective reason for unequal treatment, and whether a behavioural assumption qualifies would be for the courts to decide. The same section states that crypto assets have “not proven themselves as a digital equivalent to gold and other precious metals”.
The reasoning also contains a claim that does not survive checking. It says Germany is “almost the only country within the European Union” that exempts gains after a short holding period. Portugal exempts after 365 days and taxes shorter holdings at 28%. Czechia has exempted disposals after three years since the 2025 tax year. Luxembourg applies a six-month speculative period. Holding-period exemptions are not the German anomaly the bill describes.
The cut-off date is already in the past
The bill’s application clause turns solely on when an asset was acquired. The new rules would first apply to disposals of assets “acquired or created after 31 December 2025”.
The bill is dated 5 May 2026. The cut-off was therefore more than four months in the past when the text was introduced, and the reasoning says so openly: the new rules apply to crypto acquired from 1 January 2026, because for those assets “the one-year holding period existing until the law enters into force has not yet expired”. The drafters lean on a 2010 ruling of the Federal Constitutional Court, which held that the “mere possibility of collecting gains tax-free at a later date” creates no legally protected position.
There is also a gap the bill simply does not address. Under the finance ministry’s circular of 6 March 2025, holding periods for identical crypto assets are determined asset by asset where possible and otherwise first-in-first-out, wallet by wallet. The bill writes that consumption order into law only for foreign currency amounts, not for crypto. With an acquisition-based cut-off, the protected older holdings would in case of doubt be consumed first. How that interacts with the political promises of grandfathering is a story of its own, and we will take it apart separately.
The reform paradox: day traders would pay less
The argument that turns the debate on its head comes from the conservative side. On 31 July 2026, CDU member of parliament Olav Gutting spelled out what the ministry’s model does to short-term sellers: today, someone selling inside the one-year window pays their personal rate of up to 45%. Under the section 20 model it would be a flat 25% plus surcharge.
The reform would therefore relieve the high-earning day trader and burden the long-term holder who could previously sell tax-free after twelve months. That is the opposite of the stated intention, and it holds whatever you think of the holding period itself.
Nobody knows what this raises: estimates differ by a factor of 38
The distance between the lowest and the highest figure is a factor of 38. That is no longer estimation uncertainty; it means nobody knows the order of magnitude.
Two qualifications, both important. The Austrian figure first: the Austrian finance ministry reports around €33.84 million of capital gains tax from crypto for 2024, and that is the total collected since service providers began withholding on 1 January 2024. It is not the isolated yield of Austria’s 2022 abolition of its holding period, so it functions as a ceiling on that yield rather than a measurement of it. Scaled to Germany by population it gives the €300 million above, and that stays a ceiling too. Austria also shows what grandfathering looks like in practice, because holdings bought before March 2021 stayed outside the new regime, as we set out in our piece on Austrian pre-2021 holdings.
Second, the €11.4 billion. On 15 March 2026 the Bitcoin Bundesverband published an open letter with 15 questions about the €11.4 billion estimate, addressed to Blockpit and to the study’s author Co-Pierre Georg, covering data provenance, sample representativeness, extrapolation method and the absence of error margins. Its core line: the greater the political impact of a number, the higher the standard of transparency it has to meet. To our knowledge the questions remain unanswered.
The path that number travelled is instructive. In the finance committee session of 20 May 2026 the Greens cited the study and its €11.4 billion, then halved the amount in their own calculation and wrote “at least about €5 billion” into the bill. The bill gives no reason for the halving.
Why this is not only a German story
Two threads reach beyond Germany. The bill’s own reasoning points to the European Parliament’s proposal for the 2028 to 2034 budget framework, which includes a levy based on a uniform rate on capital gains from crypto assets as a possible new EU own resource. Germany’s domestic argument is being made with one eye on Brussels.
The second thread is data. Under DAC8, centralised crypto service providers in the EU have been collecting reportable information since 1 January 2026, with the first exchange of data scheduled for September 2027, as we set out in our piece on automatic crypto tax reporting in Germany. Whatever rate a country lands on, the visibility question is already settled, and self-custodied holdings sit outside that reporting net rather than outside the tax law.
What this means in practice
None of this produces an instruction, and anyone handing you one knows the statutory text no better than everyone else does. Three sober points remain.
Acquisition records are the bottleneck in every scenario. If the deadline survives, they prove the exemption. If it goes, they establish the gain. If grandfathering arrives, the acquisition date decides the treatment of every single lot. Export the transaction histories from your trading venues while the accounts are open and store them off the platform; Germany’s filing deadlines do not wait for the political process, as our note on the German crypto tax deadline showed. The tax-report capabilities of each venue are listed in our exchange comparison, and holdings on a hardware wallet need their address mapping documented by you.
Selling as a precaution is a bet on an unknown rule. Selling today to get ahead of a cut-off date nobody has defined can trigger a tax that holding would never have caused. That is an observation, not a recommendation in the other direction.
Watch the wording, not the headline. The two models differ on rate, on loss offsetting, on withholding and on the cut-off date. Any report that does not say which model it is describing is not telling you what you need to know.
Our managing director Dennis Weidner has worked through the primary documents, the arithmetic and the European comparison in his statement on the crypto holding period and the finance committee’s reply. Individual tax questions belong with a qualified tax adviser; this article does not replace one.
FAQ
Has Germany abolished the crypto holding period? No. As of 12 August 2026, section 23 of the Income Tax Act applies unchanged: after more than twelve months of holding, the gain is untaxed. There is no adopted law and no finance ministry draft on crypto taxation. The working draft of the Annual Tax Act 2026 of 13 July 2026 contains nothing on the subject, though a provision could still be added before the cabinet stage or later in the parliamentary process.
What is the difference between the two models? Under the section 20 model, crypto becomes capital income taxed at a flat 25% plus solidarity surcharge, giving 26.375%. Under the section 23 model it stays an “other economic good” but loses the one-year deadline and is taxed at the personal income tax rate of up to 45% plus surcharge.
How much tax would €100,000 of gains attract? Today, after twelve months, nothing. Under the section 20 model, €26,375. Under the section 23 model, €44,310 at a 42% marginal rate and €47,475 at the 45% top rate, in each case before church tax.
Would new rules apply to coins I already hold? The only fully drafted bill, 21/5752, turns on the acquisition date and captures everything acquired after 31 December 2025. No text exists for the ministry’s model. The conservatives have promised protection for existing holdings, while Die Linke explicitly rejects any transition period. The state of that debate is in our piece on petition 201716.
Does physical gold stay tax-free after a year? Under the Green bill, yes. It removes only crypto assets from the one-year rule and names gold, antiques, artworks, historic vehicles and foreign currencies as goods that keep it.
Does this affect me if I am not a German tax resident? Generally no; these rules govern German income tax. The reason to follow it anyway is that Germany’s one-year exemption is the reference point other European debates measure themselves against, and the same bill points to an EU-level levy on crypto capital gains as a possible own resource from 2028.
When could a new rule take effect? 1 January 2027 is the announced date. That would require a ministry draft, an association consultation, three readings in the Bundestag and the federal council to be completed by December 2026. None of those dates is confirmed.
None of this is settled: the ministry draft is still outstanding, the consultation of associations follows, a first reading is pencilled in for 7 to 11 September and the federal council for 18 December. Each of those steps can change which of the two models applies and which cut-off date sits inside it. We read every new text against the primary sources and summarise weekly what actually changed in the wording, in English and in German. Stay with it on cryptoticker.io.
Sources
- German Bundestag: Bill 21/5752, on closing a fairness gap in the taxation of crypto assets (PDF in German, statutory text and reasoning, 5 May 2026)
- German Bundestag, heute im bundestag: Greens fail with their push on crypto asset taxation (finance committee vote, 20 May 2026)
- Federal Ministry of Finance: Individual questions on the income tax treatment of certain crypto assets (PDF in German, circular of 6 March 2025, replacing the 10 May 2022 circular)
- Section 23 of the German Income Tax Act as currently in force
- Federal Constitutional Court: decision of 7 July 2010, 2 BvL 14/02 and others (paragraph 64, relied on in the bill’s reasoning)
- Bitcoin Bundesverband: The €11.4 billion question (open letter with 15 questions, 15 March 2026)
- Dennis Weidner: The crypto holding period and the finance committee’s reply (model comparison, revenue range, holding periods in Europe, 12 August 2026)
- Austrian Federal Ministry of Finance, capital gains tax collected on cryptocurrencies in 2024 (€33,839,499.66 in total, withholding by service providers since 1 January 2024)
Note on AI use: AI tools were used for this article – in research and drafting, and for the header image, which is AI-generated and does not depict a real event. All figures, claims and sources are editorially checked before publication.
