German parties propose breaking Bitcoin tax incentives

According to local media reports, the Left Party and the Alliance 90/Green Party want to abolish Bitcoin’s tax-free holding period.

These parties claim that huge profits are being generated with the help of cryptocurrencies (approximately 47 billion euros in 2024 alone), much of which is tax-free due to regulations.

tax-free profits

In Germany, cryptocurrency assets such as Bitcoin and Ethereum are treated as personal assets (similar to collectibles).

If you sell your virtual currency within one year, the gain will be considered taxable income. However, if you hold cryptocurrencies for more than a year, the gains are actually tax-free.

In particular, the same rules aimed at encouraging long-term investments also apply to gold, collectibles, and gold.

Why do parties want to ban it?

In their respective motions, the German Left and the Green Party argue that tax-free crypto holdings are outdated and unfair.

They argue that cryptocurrencies should be taxed like stocks, and that investors should pay taxes on capital gains even if they are held for more than a year.

Left-wing Bundestag member Isabelle Wandl said that most crypto holders in Germany do not pay taxes. “Do you know how many of the 7 million crypto users currently pay their taxes? Exactly 3%,” she said.

Apart from the two aforementioned parties, some members of the SPD also support these measures.

Meanwhile, the far-right party AfD opposes the implementation of anti-Bitcoin tax reforms. The position of the CDU’s pro-business conservatives is currently unknown, but they are likely to oppose tax reforms aimed at hurting cryptocurrencies.