Germany Considers Changes to Crypto Taxation
Germany’s Social Democratic Party (SPD) is pushing for a significant change in the country’s crypto taxation laws. The party wants to abolish the current one-year crypto-holding tax exemptions and replace them with a capital income tax of 30% on all crypto profits.
According to a published excerpt of coalition negotiations between the SPD, the Christian Democratic Union (CDU), and the Christian Social Union (CSU), the SPD is advocating for a higher withholding tax rate on private capital income.
The proposed change would mean that all income from cryptocurrencies would be taxed as capital income at a flat rate of 30%, regardless of the holding period. This move has raised concerns among experts, with educational crypto platform Blocktrainer warning that it could make bitcoin unusable as a means of payment in Germany.
Currently, Germany allows a one-year window where any realized profits from buying 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. Additionally, crypto profits under €1,000 ($1,080) are also tax-free, with gains and income above this threshold being taxed at personal rates ranging from 0% to 45%.
While the outcome of the negotiations is still uncertain, the CDU and CSU are reportedly hesitant about the proposed crypto tax changes put forward by the SPD. The recent election results saw the CDU and CSU winning the majority of seats, with the SPD coming in third.
It remains to be seen how the discussions around crypto taxation in Germany will unfold and what implications they may have for the crypto community in the country.
Read more: Ukraine to tax crypto like securities when it becomes legal next year