Debate in Germany regarding Bitcoin taxation has intensified again due to the results of the elections in Saxony-Anhalt. The Alternative for Germany (AfD) received nearly 44% of the votes in these local parliamentary elections. Although they did not win an absolute majority, they clearly outperformed the Christian Democratic Union (CDU) led by Chancellor Merkel. These state elections will not directly change federal tax law, but they have given the AfD a stronger platform to voice its political opinions at a time when the federal government is preparing to introduce crypto tax reform measures.

AfD opposes the cancellation of one-year tax exemption for holdings

AfD has previously publicly opposed the cancellation of Germany's current tax incentives for holding crypto assets. According to Germany's current regulations, individuals who hold crypto assets such as Bitcoin for more than one year before selling them are generally exempt from private sale income tax; however, if the holding period is less than one year, the related profits may be subject to taxation.

In a motion submitted to the Federal Chamber of Representatives in October 2025, AfD described Bitcoin as a digital asset that is “decentralized, difficult to manipulate, and has a limited supply,” and argued that it should be treated differently from other crypto assets. The party called for the retention of a tax exemption for individuals holding Bitcoin for 12 months, and also proposed that private Bitcoin mining and the operation of Lightning nodes should not be automatically classified as commercial activities.

The German government plans to adjust the tax system in 2027

The German federal government has made it clear that it plans to introduce tax legislation for crypto assets in its fiscal arrangements for 2027. Finance Minister Lars Klingbeil stated in April of this year that the government wishes to handle crypto asset taxation in a different manner from the current approach; by July, he mentioned that the Ministry of Finance was drafting a specific plan, aiming to tax crypto income in the same way as other types of income, but the final mechanism has not yet been disclosed.

Prior to this, the Green Party had taken the lead in advocating for the abolition of the holding period exemption. On May 6th, the party proposed a plan that suggested individuals should pay personal income tax on any profits derived from selling crypto assets, regardless of the length of time they held them. The Green Party cited a study stating that such a change could generate additional fiscal revenue. Ultimately, this proposal was rejected by the Finance Committee of the Federal House on May 20th, and the current one-year tax exemption for holding crypto assets was retained.

Behind the tax reform controversy lies a huge market scale.

This tax debate is taking place in one of Europe's largest crypto markets. Chainalysis estimates that Germany generated approximately $24.1 billion in blockchain-related crypto activities that may be subject to taxation in 2025, ranking second only to the United States among the countries it tracks.

• Approximately $15.6 billion in payment activities
• Approximately $6.1 billion in revenue has been generated.
• Approximately $2.4 billion in related revenue

Chainalysis also points out that these numbers represent the scale of activities that may fall within the scope of common tax regulations, and do not equate to the actual amount of tax payable or the amount of tax unpaid.

In addition to the scale of taxation, Germany's infrastructure for the crypto market is also continuing to expand. Chainalysis data shows that from July 2024 to June 2025, the total amount of crypto assets flowing into Germany reached 219.4 billion US dollars, a year-on-year increase of 54%. By August of this year, Germany had 79 authorized crypto asset service providers under the MiCA framework, which is more than in France and the Netherlands.

Federal legislation is the ultimate decision-making factor.

Despite AfD achieving strong results in the state elections, whether Germany's crypto tax regime will be adjusted still depends on the federal legislative process. Whether it is to cancel or modify the one-year holding rule, it must go through the federal legislative process after the Ministry of Finance publishes its proposal.

Currently, AfD has already included their stance in the motion of the Federal House, advocating for the stable maintenance of a 12-month holding rule and pushing for a legal distinction between Bitcoin and other crypto assets. Next, the market's focus will shift to when the German Ministry of Finance will announce the specific draft, as well as whether the various parties in the Federal Parliament will develop new disagreements regarding tax reform.