Germany's Proposed Crypto Tax Reform Sparks Concerns Over 50% Substitute Assessment Basis

Germany's proposed crypto tax reform has sparked concerns among industry experts, particularly regarding the 50% substitute assessment basis for taxpayers who fail to provide credible purchase documentation. According to Patrick Hansen, Senior Director of EU Strategy & Policy at Circle, this rule will disproportionately affect retail investors who lack technical expertise with crypto and taxes.

Hansen emphasized that if taxpayers cannot provide proof of their purchase costs, the agency will assume they bought the cryptocurrencies after December 31, 2026, with taxes calculated over 50% of the sales proceeds. This, he warned, will result in normal consumers and investors paying far too much tax, especially if they can't provide acquisition costs in a clean way.

Dr. David Hötzel, Associated Partner at Poellath, acknowledged that this 50% consideration creates significant liquidity risks, particularly for transfers from self-custody wallets or foreign platforms to German exchanges subject to deductions.