Germany could lose tax-free crypto policy under new ruling coalition

Germany’s Social Democratic Party (SPD) wants to abolish the country’s one-year crypto-holding tax exemptions and replace them with a capital income tax of 30% on all crypto profits.

That’s according to a published excerpt of coalition negotiations between the SPD, the Christian Democratic Union (CDU), and the Christian Social Union (CSU).

On taxation of capital income, the SPD claimed, “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 claims the proposed change is “a planned flat-rate tax of 30% on all crypto profits, regardless of the holding period.”

It also claims it “would de facto make bitcoin unusable as a means of payment in Germany.”

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Germany currently has a 12-month window where any realized profits resulting from purchasing or selling crypto are subject to income tax. However, any capital gains from crypto are tax-free if the digital asset is held for longer than a year.

Any crypto profits under €1,000 ($1,080) are also tax-free, while crypto gains and income are taxed at the personal tax rate, between 0% and 45%.

Blocktrainer notes that the outcome of these negotiations is yet to be determined and that the CDU and CSU are resistant to the crypto tax changes suggested by the SPD.

The CDU and CSU won the majority of seats in Germany’s February 28 election, with the far-right Alternative for Germany party coming second and the SPD coming third.