German Crypto Holding Period Stays: The Income Tax Reform 2027 Leaves Section 23 Untouched

The one-year holding period for private crypto gains still applies. On September 2, 2026 the German federal cabinet adopted the draft of an Income Tax Reform Act 2027, and it says nothing about the taxation of crypto assets. Anyone who holds a position for more than a year and then sells remains tax-free under the law as it stands.

That is the most useful piece of information this week for anyone who has been wondering since the summer whether to bring sales forward to get ahead of an announced reform. The announcement exists. The law that would implement it still does not.

What the Federal Cabinet Decided on September 2, 2026

The Federal Ministry of Finance published the cabinet decision the same day. The draft is called the Income Tax Reform Act 2027 and targets relief for low and middle incomes and for families with children. The ministry puts the total relief volume at around ten billion euros; the measures take full effect from 2028.

In detail the announcement names a basic tax-free allowance of 12,564 euros for 2027 and 12,900 euros for 2028, child benefit of 267 and 272 euros per month respectively, and an employee lump-sum allowance rising from 1,230 to 1,430 euros. At the upper end a new bracket of 47 percent from 280,000 euros of annual income is added, while the top rate of 45 percent is to apply from 250,000 euros in future. On the ministry's calculation, families with two children would keep over 600 euros more per year.

Crypto assets do not appear anywhere in that list. Neither Section 23 of the Income Tax Act nor a reclassification of private crypto gains as investment income forms part of the draft. The full announcement is on the site of the Federal Ministry of Finance.

Why an Omission Is News

Abolition of the holding period has been on the table since the spring. Every tax law that has passed cabinet since then is therefore a possible vehicle for that change. When one passes cabinet without it, the earliest possible date for entry into force moves further out. For tax planning in the current year that is a reliable statement.

Section 23 of the Income Tax Act: What the One-Year Holding Period Governs Today

A private disposal transaction is the sale of an asset held privately within a period set by law. On the tax administration's view, crypto assets fall under the other assets covered by Section 23(1) no. 2 of the Income Tax Act.

Two figures decide the outcome. First the period: a gain is taxable only if the interval between acquisition and disposal is no more than one year. Second the exemption threshold: under Section 23(3) sentence 5, gains remain tax-free if the total gain from private disposal transactions in the calendar year came to less than 1,000 euros. The statutory text is available at gesetze-im-internet.de.

An exemption threshold means this: once the amount is exceeded, the entire gain is taxable and not merely the excess. That is the difference from a tax-free allowance, and the two are regularly confused. On an annual gain of 999 euros from short-term sales nothing is due; at 1,001 euros the full amount is charged at your personal income tax rate.

Both figures apply unchanged and form the benchmark against which every sale you still make this year has to be measured. If you have lost track of acquisition dates and partial sales, our comparison of crypto tax software and portfolio trackers covers the programs that keep exactly this allocation automatically.

How Far Along Is the German Crypto Tax Reform Really?

The sequence of events can be documented. According to the tax firm Flick Gocke Schaumburg, Federal Finance Minister Lars Klingbeil announced the reform on April 29, 2026. In early July a budget draft followed whose key points for 2027 provide for the removal of the existing holding period; trade media report consistently that the federal cabinet approved those key points and that private crypto gains are in future to be charged at 26.375 percent regardless of the holding period. That rate is the 25 percent flat withholding tax plus the solidarity surcharge.

A key-points paper is not a legal basis. It describes a political intention and binds nobody. Between it and a tax liability lie a fully drafted bill, three readings in the Bundestag, the Bundesrat and promulgation in the Federal Law Gazette.

The ministerial draft of the Annual Tax Act 2026 published so far likewise does not contain the amendment to Section 23 of the Income Tax Act, according to a report by BTC-Echo of July 24, 2026. That means two legislative projects in 2026 that could have carried the overhaul are travelling without it.

Which Models Are Before the Bundestag

The direction of the reform is open, because several drafts sit side by side and differ on one decisive point: the treatment of existing holdings.

Abolition With Grandfathering

In Bundestag printed paper 21/5752, BÜNDNIS 90/DIE GRÜNEN propose abolishing the one-year holding period, combined with grandfathering for assets acquired before January 1, 2026. On that model anyone who bought early would stay inside the old system.

Reclassification as Investment Income

Die Linke goes further in printed paper 21/5824 and wants to allocate crypto gains to investment income, combined with a flat withholding tax and an exit tax. Exit tax means the taxation of unrealised gains at the moment a taxable person moves their residence abroad.

A Higher Rate Instead of a New System

From the SPD comes the additional demand to bring crypto into the capital gains tax regime and raise the rate from 25 to 30 percent. Within the coalition the project is contested according to reports in several trade media, with Klingbeil and the SPD pushing and the CDU/CSU holding back. No assessment of which version will prevail can be derived from that, and we offer none here.

How the two basic models would work out on a worked example we have calculated in our comparison of the two tax models. The course of the public debate is documented in our article on the petition against abolishing the holding period.

Why the Acquisition Date Matters More Than the Price

All three models attach to the moment of acquisition, either for calculating the period or for grandfathering. The cut-off date of January 1, 2026 in the Greens' proposal makes that particularly clear.

From this follows an unspectacular but effective step. Every position needs a documented acquisition date, a documented acquisition price and a traceable allocation of partial sales. That is already necessary today for the one-year period and would be all the more so under any conceivable reform model.

It becomes especially awkward with holdings that have been moved between several exchanges and wallets. A transfer to another address is not a sale and triggers no tax, but it frequently breaks the providers' automatic history. Anyone who made such transfers in recent years should close the gaps now, while records can still be obtained.

FIFO and the Question of Which Unit You Are Selling

FIFO stands for first in, first out and describes the assumption that the units acquired first are also the first to be disposed of. For the holding period the allocation is decisive, because it determines whether a unit sold had already passed the one-year mark. With a holding built up over years the acquisition dates lie far apart, and a single sale can affect units from several periods.

Anyone buying regularly, for instance through a Bitcoin savings plan, creates a separate period with every instalment. That is no disadvantage for tax purposes, but it does demand clean record keeping.

The Crypto Tax Transparency Act and DAC8: What Exchanges Report to the Tax Office From 2026

Alongside the debate about the holding period runs a project that is already law in force. The Crypto Asset Tax Transparency Act transposes the EU directive DAC8 into German law and obliges providers of crypto asset services to record and report tax-relevant transactions of their users.

The first reporting period is the calendar year 2026. The first electronic transmission to the Federal Central Tax Office takes place in 2027, by July 31 at the latest. According to the material available, what is reported covers personal data such as name, address, date of birth and tax identification number, together with transaction data. Breaches of the reporting and documentation duties expose providers to fines of up to 50,000 euros.

For you that has one plain consequence: the figures your exchange reports for 2026 will later meet the figures in your tax return. Where they diverge, explanation will be required. Whether your provider falls within the scope at all, and how cleanly it exports data, has therefore become a solid selection criterion; our overview of the best crypto exchanges ranks providers on this point too.

What a Sale Brought Forward Costs in Tax

Out of concern about the reform, many investors considered bringing gains forward over the summer. After the cabinet decision of September 2 it is settled that this step is at any rate not forced by this law.

In arithmetic terms a sale brought forward is free of tax consequences only if the units sold have already passed the one-year mark. If the acquisition was less than a year ago, a taxable gain arises at your personal income tax rate as soon as the exemption threshold of 1,000 euros in the calendar year is reached. A sale meant to avoid a reform can thus trigger a tax that would not have existed without it.

On top of that come trading costs and the spread, which fall due a second time on a later repurchase. With Bitcoin and other liquid assets that weighs less heavily than with smaller positions, but it does not disappear.

When a Sale Can Still Make Sense

There are reasons for selling that have nothing to do with legislation: a position that has grown too large, an upcoming need for liquidity, a changed assessment of risk. Those reasons are untouched by the reform debate. What changes is the urgency alone: there is currently no statutory reason to accelerate a decision.

What to Watch in the Coming Months

Three points decide whether the position changes. The first is a ministerial draft that actually contains an amendment to Section 23 of the Income Tax Act; so far none exists. The second is whether such a draft provides for grandfathering with a cut-off date, since that determines whether existing holdings would be affected. The third is the lead time between promulgation and entry into force.

As long as none of these points is established, the legal position remains the one written in the statute today. We deliberately do not write here how likely a reform is, because that cannot be derived from the documents available.

The Crypto Holding Period: What to Take Away

1. Documentation before reaction. Pull together the acquisition date, acquisition price and partial sales for every position before you think about selling. You need this data under the law as it stands today and under every one of the models being discussed. Which programs keep it automatically is set out in the comparison of crypto tax software and portfolio trackers.
2. No selling on suspicion. Before any sale brought forward, check whether the units concerned have already passed the one-year mark and whether the annual gain breaches the 1,000 euro exemption threshold. Trading costs and the spread belong in the same calculation; how they differ between providers is set out in the overview of the best crypto exchanges.
3. Prepare for the 2027 data matching. Reconcile your provider's annual statement for 2026 with your own records while the year is still running and records are still within reach. If you buy regularly, it is best to set the periods up cleanly from the outset; how that works with ongoing instalments is set out in the comparison buying Bitcoin with a savings plan.

(As of September 7, 2026. This article is not investment advice and not tax advice. Prices, the legal position and fee structures change; check the terms with the provider before you buy, and have tax questions reviewed professionally in your individual case.)