Germany’s Bitcoin tax fight heats up after AfD election victory

Germany's debate over Bitcoin taxation has gained a new political dimension after the Alternative for Germany won nearly 44% of the vote in Saxony-Anhalt, months after the party opposed plans to remove the country's one-year crypto tax exemption.
Summary

• The AfD won nearly 44% of the vote in Saxony-Anhalt and secured 39 of the state parliament's 83 seats.
• The party has opposed efforts to remove Germany's one-year tax exemption for privately held Bitcoin and other crypto assets.
• Germany's government plans new crypto tax legislation for 2027, although the final mechanism has not yet been disclosed.
• Chainalysis estimated Germany generated $24.1 billion in potentially taxable on-chain crypto activity in 2025.

Reuters reported that the AfD secured 39 of the 83 seats in the state parliament, leaving the party three seats short of an outright majority but well ahead of Chancellor Friedrich Merz's Christian Democratic Union.

The AfD received 43.8% of party-list votes and 44.3% of first votes across 2,661 polling districts. The CDU fell to 17.2% of party-list votes, almost 20 percentage points below its result in the 2021 election, while voter turnout reached 77.8%, up 17.5 percentage points.

The state election does not give the AfD additional seats in the Bundestag or allow Saxony-Anhalt to change Germany's federal crypto tax rules. It does, however, give the party another political platform while the federal government prepares legislation that could change how long-term cryptocurrency gains are taxed from 2027.

AfD win strengthens a vocal opponent of Germany's Bitcoin tax plan

Merz ruled out cooperation with the AfD after the result, telling reporters that the election had shaken the CDU "to its very foundation," Reuters reported.

AfD co-leader Tino Chrupalla called on CDU lawmakers to work with his party to create what he described as a "center-right conservative majority." Such an arrangement would break the long-standing political firewall under which Germany's mainstream parties have refused to cooperate with the AfD.

The AfD's Saxony-Anhalt branch has been classified as right-wing extremist by the state's domestic intelligence agency. Reuters described the party as anti-immigration and pro-Russia, while co-leader Alice Weidel called the election result a breakthrough and said the AfD was targeting at least 40% of the vote in Germany's 2029 federal election.
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Crypto taxation has formed part of the party's economic agenda since before its Saxony-Anhalt victory.

In an October 2025 Bundestag motion, the AfD described Bitcoin as a "decentralized, non-manipulable, and limited-availability digital asset" that it argued should be treated differently from other cryptocurrencies.

The party called for Bitcoin to be excluded from the European Union's Markets in Crypto-Assets framework and asked the federal government to preserve the 12-month holding period for privately held Bitcoin. It proposed that private Bitcoin mining and Lightning node operations should not automatically be classified as commercial activities.

Germany's one-year crypto tax exemption remains in place

Germany currently treats privately held cryptocurrencies as other assets under its income tax rules. Gains are taxable when the period between acquisition and disposal is no more than one year, while disposals after the holding period are generally outside the private-sale tax regime.

Berlin has been preparing to change that treatment.

As crypto.news previously reported, Finance Minister Lars Klingbeil said in April that the government intended to tax cryptocurrencies differently as part of its 2027 budget plans.

The federal cabinet's 2027 budget plan subsequently confirmed that legislation covering the taxation of crypto assets would be introduced. Klingbeil said in July that his ministry was working on the proposal and wanted cryptocurrency income to be taxed in the same way as other income, although the government had not yet released the final mechanism.

Germany's Green Party had already tried to remove the holding-period benefit earlier in the year.

A proposal advanced by the Greens on May 6 sought to make gains from private crypto disposals subject to personal income tax regardless of how long the assets had been held. The party based its revenue case on a Frankfurt School study that estimated an additional €11.4 billion could be raised, while using only half of that figure in its own calculations to account for uncertainty.

The proposal failed in the Bundestag Finance Committee on May 20 after lawmakers from several parties opposed it. The committee rejected the plan, leaving the existing holding-period treatment intact.

The AfD opposed the Greens' proposal and argued that the government should tax fewer activities while concentrating spending on core state functions. CDU/CSU and SPD lawmakers opposed the proposal for separate reasons.

Germany's crypto tax debate covers billions in on-chain activity

The tax dispute is taking place in one of Europe's largest cryptocurrency markets.

Chainalysis estimated that Germany generated $24.1 billion in potentially taxable on-chain crypto activity during 2025, second only to the United States among individual countries covered by its analysis.

The figure consisted of $15.6 billion in payments, $6.1 billion in realized gains and $2.4 billion in income. Chainalysis cautioned that its calculations represented activity that could potentially fall within commonly used tax rules, not the amount of tax owed or unpaid.

Globally, potentially taxable activity exceeded $457 billion in 2025, according to the analytics firm. Transactions falling within the practical reach of the OECD's Crypto-Asset Reporting Framework accounted for only 14% of the total identified activity.

Germany has separately remained one of Europe's largest markets by total crypto value received. Chainalysis recorded $219.4 billion flowing into the country between July 2024 and June 2025, representing a 54% increase from the previous comparable period.

A survey of roughly 6,000 investors across Germany, France, Italy and Spain found that 25% of German respondents had already invested in digital assets. Nearly half of respondents across the four countries said the EU's MiCA framework had made digital assets feel safer and more accessible.

Regulated crypto infrastructure has continued to expand alongside that activity. Germany had 79 authorized crypto asset service providers under MiCA by August, after six cooperative banks joined the European Securities and Markets Authority register. France had 35 authorized providers at the time, while the Netherlands had 29.

Federal lawmakers will decide any Bitcoin tax change

Despite the scale of the AfD victory in Saxony-Anhalt, Germany's federal tax treatment of cryptocurrency cannot be changed by the state government.

Any removal or modification of the one-year holding rule would have to move through the federal legislative process after the Finance Ministry releases its proposal.

The government has committed to introducing legislation on crypto taxation as part of its 2027 fiscal plans. Klingbeil said during a July press conference that the ministry was working on the measure and expected a concrete bill, but declined to disclose its provisions before the government's internal coordination process had been completed.

The AfD, meanwhile, has already put its preferred treatment into a Bundestag proposal. Its October 2025 motion called for the 12-month Bitcoin holding period to be preserved reliably, sought a legal distinction between Bitcoin and other crypto assets, and proposed keeping private mining and Lightning node activity outside commercial classification.

With 39 seats in Saxony-Anhalt's 83-seat parliament, the party now faces the separate question of whether it can assemble enough support to govern the state. Chrupalla has urged CDU lawmakers to cooperate, while Merz has maintained that his party will not form an alliance with the AfD.
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