The debate over Bitcoin taxation in Germany has reignited following the election results in Saxony-Anhalt. The AfD secured nearly 44% of the vote in the state parliamentary election, leading significantly over the CDU, the party of Chancellor Merz, though it did not achieve an absolute majority. While this state election will not directly alter federal tax law, it has given the AfD a stronger political platform just as the federal government prepares to introduce new cryptocurrency tax reforms.
AfD opposes the elimination of the one-year tax-free holding period.
The AfD has previously publicly opposed the elimination of Germany’s current tax exemption for holding crypto assets. Under current German rules, individuals who hold crypto assets such as Bitcoin for more than a year before selling are typically exempt from private sale income tax; however, gains from sales made within a year of acquisition may be subject to taxation.
In a federal parliament motion submitted in October 2025, the AfD described Bitcoin as a decentralized, difficult-to-manipulate, and supply-limited digital asset and argued that it should be treated differently from other crypto assets. The party called for maintaining the tax exemption for individuals holding Bitcoin for more than 12 months and proposed that private Bitcoin mining and Lightning node operation should not automatically be classified as commercial activities.
The German government plans to adjust its tax system by 2027.
The German federal government has confirmed plans to introduce cryptocurrency tax legislation in the 2027 budget. In April, Finance Minister Lars Klingbeil stated that the government aims to treat cryptocurrency taxation differently from the current approach; by July, he added that the finance ministry was drafting specific proposals to tax crypto income as other forms of income, though the final mechanism has not yet been disclosed.
Prior to this, the Green Party had taken the lead in pushing to eliminate the holding period tax benefit. On May 6, the party proposed a plan advocating that income from individuals selling cryptocurrency assets be subject to personal income tax regardless of holding duration. The Greens cited a study suggesting this adjustment could generate additional government revenue. Ultimately, the proposal was rejected by the Federal Parliament’s Finance Committee on May 20, preserving the existing one-year holding period tax exemption.
Behind the tax reform controversy lies a massive market size.
This tax debate is taking place in one of Europe’s largest crypto markets. Chainalysis estimates that Germany generated approximately $24.1 billion in on-chain crypto activities potentially subject to taxation in 2025, second only to the United States among the countries it tracks.
- Approximately $15.6 billion in payment activity
- Approximately $6.1 billion in realized gains
- Approximately $2.4 billion in related revenue
Chainalysis also noted that these figures represent the scale of activities that may fall under common tax rules and do not equate to actual tax liabilities or unpaid taxes.
Beyond tax revenue, Germany’s cryptocurrency market infrastructure continues to expand. According to Chainalysis data, the total value of crypto assets flowing into Germany from July 2024 to June 2025 reached $219.4 billion, a 54% year-over-year increase. As of August this year, Germany had 79 authorized crypto asset service providers under the MiCA framework, surpassing France and the Netherlands.
Federal legislation is the final deciding factor.
Despite the AfD's strong performance in state elections, any adjustment to Germany's cryptocurrency tax regime still depends on federal legislative procedures. Whether eliminating or modifying the one-year holding period, any change must go through the federal legislative process after being proposed by the Ministry of Finance.
Currently, the AfD has pre-emptively outlined its position in a parliamentary motion, advocating for the permanent retention of the 12-month holding period and pushing for distinct legal treatment of Bitcoin and other crypto assets. Next, market attention will turn to when the German Federal Ministry of Finance will release its detailed draft and whether political parties in the Bundestag will develop new divisions over tax reform.