Germany to change cryptocurrency tax law

The German government is considering a change to how profits from cryptocurrency sales are taxed. In the meantime, Finanztip advises against making any new cryptocurrency investments.

What are Germany’s current tax laws for crypto?

The German tax system considers cryptocurrency as private assets. This means that if you buy cryptocurrency and own it for at least one year before you sell, you do not have to pay tax on any profits you make.

If you sell the coins within a year of purchasing them and make profits of 1.000 euros per year or more, these profits are taxed. These rules have made cryptocurrency trading in Germany more attractive compared to other countries. Now, the CDU/CSU-SPD coalition is planning to change the rules.

If you’ve still not wrapped your head around cryptocurrencies and how they work, the video below from The New York Times may help.

What is the CDU/CSU-SPD planning?

The German government is looking for ways to plug holes in its federal budget. Among other changes, military spending has been significantly increased, and cuts are being made to statutory health insurance.

It is against this background that the government is considering stricter tax laws on cryptocurrency profits. Details of the new rules are currently unclear. 

According to the Ministry of Finance's current draft budget, “the government could, for example, eliminate the one-year holding period - cryptocurrency gains would be taxable even if you hold them for several years”.

It is also unclear whether the new rules will apply to people who already own cryptocurrency or only to future purchases. While the draft law is in debate in the Bundestag and Bundesrat, German financial advice magazine Finanztip has warned against investing in cryptocurrency.

“If you still want to do so, invest only in Bitcoin and only an amount that you can afford to lose,” editor Nadine Graf recommends.