Overview
- The Bundeskabinett included a plan in the 2027 budget draft to scrap the one-year tax-free rule for privately held cryptocurrencies and reclassify gains as income from capital.
- Under the proposal crypto profits would likely be taxed under the flat Abgeltungsteuer rate of about 26.375 percent plus any church tax, replacing the current hold-period exemption and small-sale rules.
- The measure is not law and needs a change to the Einkommensteuergesetz, formal drafting and parliamentary approval after the summer with votes possible in September.
- Legal experts warn the reclassification may clash with a 2023 Bundesfinanzhof ruling that treated cryptocurrencies as “other assets,” which could prompt court challenges.
- Officials and industry sources say revenue estimates are uncertain, implementation will require new reporting systems for brokers and tax authorities, and investors have a limited window to act before rules change.