Germany to Decide on Crypto Tax Reform on October 14

The German Federal Ministry of Finance has sent a draft bill on crypto taxation to industry associations, and the cabinet is expected to decide on October 14. The bill aims to reclassify gains from cryptocurrency sales and abolish the one-year holding period, which currently allows investors to avoid paying taxes on gains. The shift from Section 23 to Section 20 of the German Income Tax Act means that investors will have to pay 25% capital gains tax plus the solidarity surcharge on gains, regardless of how long the position was held.

According to the draft, the current holdings will be grandfathered, and anything acquired by December 31, 2026, will still be subject to the old law. However, anything added from January 1, 2027, will fall under the new system. The ministry estimates that this will bring in around 350 million euros in additional annual revenue.

Frank Schäffler, an FDP member of the Bundestag, has criticized the draft, saying that the costs for citizens and business are still unclear. He also pointed out that the ministry has only added the figures to the previous draft, with no substantial changes.

The deadline for comments from industry associations is October 6, and the cabinet is expected to decide on October 14. Investors are advised to keep a close eye on the developments, as the new tax rules may affect their portfolios.