Hold for twelve months, then sell tax-free. This rule is one of the few points in German tax law that many crypto investors can still understand without a tax adviser. Anyone who holds Bitcoin or other cryptocurrencies as private assets for longer than one year can realize gains tax-free under the current legal situation. Within this period, taxation as a private sale transaction applies, provided the exemption limit is exceeded.
This rule is not perfect. But it is clear. It broadly distinguishes between short-term speculation and long-term ownership. Anyone who buys, swaps and sells quickly has to pay tax on possible gains. Anyone who holds for years is treated differently for tax purposes. Precisely this predictability is important for many people who do not see Bitcoin as a casino chip, but as a long-term addition, a scarce digital good or an attempt at protection against currency devaluation.
Now the Greens and the Left want to abolish this holding period. Gains from cryptocurrencies would remain taxable even after one year. This is being sold as fairness. In reality, there is a threat of a tax policy that neither creates genuine equal treatment nor strengthens trust. It looks like an attempt to have the state’s self-inflicted spending holes plugged elsewhere, and the easiest way to do that is where simple emotional approval and therefore less resistance can be expected.
Equal treatment looks different
The most important point is often lost in the political debate: Anyone who wants to treat cryptocurrencies like shares for tax purposes would also have to treat them consistently like shares. That is exactly what is not happening with the new tax plans. In Germany, gains from shares are generally subject to withholding tax. It is a flat 25% plus solidarity surcharge and, where applicable, church tax. Crypto gains within the current holding period, by contrast, are taxed at the personal income tax rate. That rate can be significantly higher. If the holding period is abolished and crypto is permanently taxed according to this pattern, there will be no equal treatment with shares. There will be only and solely a worse position.
And that is precisely the core of the criticism. Politically, people speak of a fairness gap. In practice, the very asset class that already involves more documentation work, technical personal responsibility and regulatory uncertainty would be burdened more heavily. For tax purposes, cryptocurrencies are currently not shares. They are treated as other economic goods, similar to gold, foreign currencies or art.
Anyone who wants to change this classification has to reorganize the system cleanly. Simply breaking out the tax-free holding period without transferring crypto into a coherent capital income system is not a reform. It is fiscal cherry-picking.
Long-term holders are hit above all
The current holding period does not protect the hectic trader. That trader is already taxed today if gains arise within one year. Abolition would mainly hit people who have built up small amounts over a longer period. Savings plans, self-custody, long-term holding, little movement in the portfolio. This is exactly the group that would be placed at a disadvantage. That is contradictory, because the same political camp elsewhere emphasizes private provision, personal responsibility and participation in the capital market. Citizens are supposed to do more themselves because statutory systems are reaching their limits. But as soon as they choose an instrument that does not fit into the classic financial market order, tax reliability is supposed to disappear.
This point is especially important with Bitcoin. Bitcoin pays no dividend, has no board of directors, no balance sheet and no earnings forecast. For many holders, it is not a normal security but a scarce digital good. Not everyone has to share this view. But anyone who ignores it for tax purposes should at least honestly say that not only speculation is being fought, but that long-term holding is also being made less attractive.
Retroactive application damages trust
The debate becomes even more delicate as soon as existing holdings are affected. There is sometimes talk of cut-off dates and protection for older purchases. This exact question determines the severity of the intervention. Genuine retroactive effect on cryptocurrencies already acquired would be a massive breach of trust.
Tax law may change. No law is frozen for all eternity. But a state that treats long-term holding differently for tax purposes for years and later retrospectively changes the rules damages the basis of every form of private planning. People have made purchase dates, documentation, custody and selling decisions on the basis of the rules in force. Anyone who retroactively devalues that basis is not hitting tax evaders, but citizens who complied with the law.
Even if legacy holdings were formally protected, the message would be: What seems predictable today can be politically rearranged tomorrow. Wealth accumulation requires time. Time requires trust. Trust does not arise when the state changes the conditions on its own with every new political mood and under every newly elected government.
More control, less reliability
In parallel with the holding-period debate, tax transparency in the crypto sector is increasing anyway. European rules are ensuring that platforms and service providers have to report more. Tax authorities are gaining more insight into transactions and holdings. This makes tax evasion more difficult. That is understandable as an objective.
Precisely for that reason, however, abolishing the holding period looks like an additional thumbscrew. The state is gaining even more control and at the same time wants to abolish long-term tax exemption. The impression arises that regulation is not merely intended to create order, but above all to open up new sources of revenue. A predictable state would act differently. It would create clear documentation rules, protect legacy holdings, regulate transitions cleanly and establish genuine equal treatment.
Bad projects do not justify bad tax policy
Of course there is fraud, hype, dubious projects and pure speculation in the crypto market. That cannot be talked away. But bad projects are no argument for bad tax policy. Anyone who throws Bitcoin, memecoins, questionable exchanges and long-term self-custody into one pot is making things too easy for themselves and in some cases has understood nothing at all. Good policy must always differentiate and draw boundaries. It can tax short-term speculation without punishing long-term holding across the board. It can create transparency without destroying trust retroactively. It can strive for equal treatment without merely picking out the higher burden from another system.
That is exactly where the planned abolition of the holding period, currently being pushed mainly by the Greens and the Left, fails. The plans sound like fairness, but they smell of mistrust. Citizens are supposed to provide for themselves, but only in politically accepted forms. Citizens are supposed to assume personal responsibility, but not trust that clear rules will last. Citizens are supposed to think long-term while the state looks for new short-term ways to gain access.
Germany and a liberal democracy need more people who save, invest and assume responsibility over the long term. Anyone who really takes both seriously must not punish long-term holding.
