Germany’s Crypto Tax Proposal

Germany’s Social Democratic Party (SPD) aims to abolish the one-year crypto-holding tax exemption, proposing instead a 30% capital income tax on all crypto profits.

This was revealed in excerpts from coalition negotiations involving the SPD, the Christian Democratic Union (CDU), and the Christian Social Union (CSU).

Proposed Changes

The SPD stated, “We are increasing the withholding tax rate on private capital income to 30 percent. We are taxing income from cryptocurrencies as capital income.”

Educational crypto platform Blocktrainer described the change as a planned flat-rate tax of 30% on all crypto profits, regardless of holding duration. They noted this policy could effectively render bitcoin unusable as a payment method in Germany.

Current Tax Rules

Under current regulations, Germany allows a 12-month period wherein realized profits from crypto transactions are subject to income tax. However, any gains from digital assets held for over a year remain tax-free.

Additionally, crypto profits below €1,000 ($1,080) escape taxation, while gains and income are taxed according to personal tax rates, which range from 0% to 45%.

Blocktrainer pointed out that the final direction of these negotiations remains uncertain, as the CDU and CSU express resistance towards the SPD’s proposed tax alterations.

In the recent February 28 election, the CDU and CSU secured a majority, with the far-right Alternative for Germany party in second place, and the SPD positioned third.