Response to the draft bill on crypto taxation: keep section 23 EStG, build up enforcement
Our response of 5 October 2026 to the "draft act reforming the taxation of certain crypto assets held as private assets" (draft of 30 September 2026) is addressed to the Federal Ministry of Finance, unit IV C 1. Its yardstick is even enforcement. This article summarises it; the full text, with all references, is available as a PDF in German.
- Recommendation: keep section 23 EStG for crypto assets and build up enforcement through DAC 8/KStTG, CARF, the Transfer of Funds Regulation and the AML Regulation — verification instead of a final withholding tax. Analyse the reporting data first, then decide on a change of system.
- The explanatory memorandum identifies no enforcement deficit in the current section 23 EStG and examines no alternative ("Alternatives: None"). The compliance cost is marked "[to follow]" throughout.
- In the alternative: if the ministry keeps the withholding system, the response sets out minimum requirements — among them a fallback tax base of no more than 30%, passing on acquisition data on a change of provider, and a proportionate procedure for covering the withholding on swaps.
- In any case: treat stablecoins and e-money tokens uniformly like foreign currency, a special analysis of Anlage SO as the starting point for the revenue estimate, twelve months of lead time for ordinances and interfaces, and an evaluation after three years.
- Procedural status: the response is a contribution to the industry consultation (deadline 6 October 2026). It does not change the law in force; the cabinet is due to consider the draft on 14 October 2026.
PDF · 23 pages · approx. 371 KB · German
The recommendation in three steps
The response pairs a recommendation on the system as a whole with concrete proposals for the case that the legislature does not take it up.
| Step | Proposal |
|---|---|
| 1. Recommendation | Section 23 EStG stays. Enforcement is built up through DAC 8/KStTG, CARF, the Transfer of Funds Regulation and the AML Regulation (verification instead of final withholding). Measure first, then decide. |
| 2. In the alternative | If the ministry keeps the withholding system: minimum requirements so that the withholding covers the typical case and is built to be enforced — including proportionate cover for the withholding on swaps and a proof procedure for transfers to own wallets. |
| 3. In any case | Treat stablecoins and e-money tokens uniformly like foreign currency; clarifications to individual provisions; a special analysis of Anlage SO; an examination of alternatives and of compliance cost; twelve months of lead time; an evaluation after three years with key figures. |
The draft rests the switch to a final withholding tax on no demonstrated enforcement problem. In our view it can itself create an enforcement risk. With the case law of the Federal Fiscal Court (judgment of 14 February 2023, IX R 3/22), the ministry circular of 6 March 2025 and the new reporting duties, a workable procedure with a growing body of data is already in place.
What the draft gets right
The response expressly names points that should be kept in the further process, whatever the decision on the system as a whole.
- Protection of existing holdings: according to the memorandum on section 52 EStG, existing holdings stay under sections 22 and 23 EStG. That creates trust and avoids valuing every holding at a cut-off date.
- Realisation principle: disposal gains and ongoing income are taxed, not unrealised increases in value.
- Link to the reporting infrastructure: the withholding agents are defined through the terms of the KStTG and MiCAR, so providers need not maintain a second definition.
- Transparent treatment of tokens with real-world value: NFTs, security tokens and similar crypto assets stay under the rules that already apply to them.
- Realistic view of the data: the memorandum concedes that the withholding agent does not know the acquisition cost of holdings acquired elsewhere and provides for ordinances on this.
- Transition period for the withholding: withholding is to apply only from 1 January 2028. We suggest tying it to the availability of the ordinances.
Six enforcement issues
The draft transplants the withholding procedure for securities into a market where some of its preconditions are missing: there is no closed data circle of domestic custody, uniform master data and custody-transfer notices.
The withholding reaches only part of the market
Only domestic crypto-asset service providers and operators, and domestic branches and permanent establishments of foreign providers, must withhold (section 44(1) sentence 4 no. 1a EStG, draft). Providers with a MiCAR passport but no domestic establishment, self-custody and decentralised venues stay outside. In the BearingPoint/YouGov survey (4,149 respondents, June/July 2026), 16% name Binance, 11% Bitpanda and 10% Coinbase as their first-choice trading platform. According to the BaFin survey of April 2026, around 13% of adults hold crypto assets — more than nine million people.
Final effect without verification
Under section 43a(2) sentence 17 EStG (draft), acquisition cost and acquisition date are taken from the taxpayer’s statements unless the provider holds contrary data. According to the memorandum, withholding "in the correct amount" has final effect. For holdings acquired elsewhere the provider can verify neither amount nor date. The draft thereby moves the declaration principle into the withholding procedure and strips it of the verification principle.
The fallback tax base can act as an incentive to leave
Where no usable data exist, withholding is computed on 50% of proceeds (section 43a(2) sentence 18 EStG, draft); for securities the figure is 30%. The memorandum gives no reason for the difference. Because the draft contains no duty to pass on acquisition data when a customer changes provider, the fallback would become the normal case there. Rational investors would then move to providers outside the perimeter or into self-custody.
Old and new holdings as a fact nobody can verify
The cut-off date decides between 0% and roughly 26.4% tax on the gain. DAC 8 reports are aggregated per crypto asset and contain neither acquisition date nor acquisition cost. Neither provider nor tax office can tell from the reporting data whether a holding was acquired before or after the cut-off date. That creates an incentive to pass new purchases off as old holdings.
Loss offsetting and structuring
Losses on new holdings can be offset in the general pool of section 20(6) EStG, including against interest and dividends. A rule against immediate repurchase is missing, so losses can be realised without giving up the economic position.
Enforcement shifts to the state tax administrations
Assessment has to bring together what the withholding does not deliver: acquisition data, existing holdings, self-custody, foreign providers and the correction of the fallback base. On the compliance cost for the administration the draft contains only the placeholder "[to follow]".
| Tax base | Base amount | Withholding tax 25% | Solidarity surcharge 5.5% | Total withheld |
|---|---|---|---|---|
| Actual gain | EUR 2,000 | EUR 500.00 | EUR 27.50 | EUR 527.50 |
| Fallback for securities (30%) | EUR 12,000 | EUR 3,000.00 | EUR 165.00 | EUR 3,165.00 |
| Fallback in the draft (50%) | EUR 20,000 | EUR 5,000.00 | EUR 275.00 | EUR 5,275.00 |
The amount withheld exceeds the tax actually owed tenfold; the difference is refunded only in the assessment (section 32d(4) EStG).
Constitutional yardstick
According to the case law of the Federal Constitutional Court, even enforcement is not a matter for the administration alone but a duty of the legislature.
The Federal Constitutional Court requires equality in the actual burden. Where assessment depends on the taxpayer’s declaration, the declaration principle must be complemented by the verification principle (BVerfG, decision of 27 June 1991, 2 BvR 1493/89, BVerfGE 84, 239). The legislature must embed the substantive tax rule in an environment that ensures equality of the actual burden — through withholding at source or through verification in the assessment procedure (BVerfG, judgment of 9 March 2004, 2 BvL 17/02, BVerfGE 110, 94).
For section 23 EStG the Federal Fiscal Court denied a structural enforcement deficit in 2023 and pointed to collective information requests under section 93(1a) AO and the OECD Crypto-Asset Reporting Framework (BFH, judgment of 14 February 2023, IX R 3/22). It follows for the draft that a new collection system must be measured by whether it improves or worsens the actual burden. A perimeter that covers only part of the market from the outset can mean that the gap is built into the rule itself.
By decision of 18 March 2022 (7 K 120/21) the Fiscal Court of Lower Saxony referred to the Federal Constitutional Court the question whether the Abgeltungsteuer is compatible with Art. 3(1) of the Basic Law (2 BvL 6/22). It was never decided: after the underlying proceedings were resolved, the Fiscal Court withdrew its referral on 10 August 2022. The question is therefore neither confirmed nor rejected. The response takes no position on the merits but asks that the budgetary risk from the open referral be examined and quantified. The proposed verification model is tax-rate neutral and would not be affected by such a decision.
Verification instead of final withholding
The control instruments that the Federal Fiscal Court in 2023 expected as the answer to an enforcement problem have now been created. They work regardless of tax rate and category of income.
| Instrument | Effective from | Benefit for enforcement |
|---|---|---|
| DAC 8 / KStTG | Reporting period 2026; first report by 31 July 2027 | Report per user and crypto asset, including transfers to external wallet addresses (aggregated); also applies to non-EU providers with EU customers |
| CARF | Data collection since 1 January 2026 in the committed jurisdictions; first exchanges 2027 | Covers providers in third countries and makes their data usable for the tax office |
| Transfer of Funds Regulation | since 30 December 2024 | Sender and recipient data; for transfers above EUR 1,000 from or to self-hosted addresses the provider must check whether the address belongs to the customer |
| AML Regulation | from 10 July 2027 | Due diligence for occasional transactions from EUR 1,000; ban on anonymous accounts at obliged entities |
| Fiscal Code (AO) | immediately | Collective information requests (sec. 93(1a)), enhanced duty to cooperate in cross-border matters (sec. 90(2)), risk management (sec. 88(5)), estimation (sec. 162) |
These instruments cover providers wherever they are based, rely on data from the provider rather than on customer statements, work for section 23 EStG just as for section 20 EStG, and drive neither providers nor customers out of a perimeter. The response is open about their limits: the reporting data contain no acquisition cost and no individual transactions, transfers into self-custody are visible only in aggregate, and the administration needs the capacity to analyse the data.
The proposed verification model
- automated comparison of DAC 8 data with the income tax return through the risk management system, with a dedicated annex or code for crypto assets;
- a standardised, machine-readable transaction log in case of discrepancies, based on the documentation requirements of the ministry circular of 6 March 2025;
- individual data from domestic providers to the Federal Central Tax Office on request, not as a blanket full collection;
- wallet attribution under the Transfer of Funds Regulation and the AML Regulation on request, which also serves as proof of neutral transfers between own wallets;
- a query with an opportunity to explain before any intervention: a discrepancy alone proves neither intent nor gross negligence;
- making the reported data available to the taxpayer too, for example through the pre-filled return;
- a pilot of the comparison, annual enforcement key figures and early information on DAC 8 and on the right to correct a return under section 371 AO — the response rejects a separate amnesty.
Staged plan: measure first, then decide
- Immediately: a special analysis of Anlage SO from assessment year 2023 by the states.
- By 31 July 2027: first DAC 8 reports for 2026; building and testing the automated comparison.
- Assessments for 2026 and 2027: comparison of reporting data with declared income, publication of key figures.
- Afterwards: the legislature decides on an empirical basis whether an enforcement deficit exists and whether withholding is the right tool.
In the alternative: minimum requirements for a withholding system
If the ministry keeps the change of system, the law should regulate at least the following points.
Fallback tax base: no departure from the 30% that applies to securities; acquisition data supplied later in the calendar year must be taken into account; the assumption of an acquisition after 31 December 2026 does not bind the assessment; where the fallback is applied, final effect is excluded and the tax certificate shows that it was used (model: sec. 56(3) InvStG).
Data chain: a statutory duty to pass on acquisition date, carried-forward acquisition cost and old/new status when a customer changes provider; a holdings report as of 31 December 2026; an official form for customer statements, with no liability for the provider who follows the requirements.
Transfers to own wallets: the draft does not say how a provider is to tell a transfer to the customer’s own self-hosted wallet from a transfer to another creditor. A statutory proof procedure is needed, based on a customer declaration and the wallet attribution already collected; choosing self-custody does not in itself create a presumption of a change of creditor.
Further: inclusion of providers with a MiCAR passport and a larger domestic business, a rule against the immediate repurchase of realised losses, a start for withholding no earlier than twelve months after publication of the ordinance and data interfaces, and an evaluation after three years.
- Fallback baseno more than 30%, no final effect
- Change of providermake passing on data a statutory duty
- Own walletstatutory proof procedure
- Lead timeat least twelve months
Covering the withholding on swaps (section 44(1) sentence 8 EStG, draft)
When one crypto asset is swapped for another, withholding tax arises without any euros reaching the customer. The statutory text provides only that the withholding agent may collect the shortfall from an account in the creditor’s name without his consent; the memorandum speaks of realising part of the crypto assets used. For a swap worth EUR 40,000 with unknown acquisition cost and an actual gain of EUR 2,000, the provider would have to sell tokens worth EUR 5,275 although only EUR 527.50 is owed. The investor gets the excess of EUR 4,747.50 back only in the assessment, in euros, not in tokens.
The response proposes a staged procedure: tokens worth the missing amount are blocked and the customer has five working days to pay in; only afterwards, and only to the extent needed, are assets realised in a statutory order that is as gentle as possible (stablecoins and units with little taxable gain first), which counts as part of the underlying transaction and triggers no further withholding; at the customer’s request, a loan against collateral instead of a sale; and no liability for the provider who follows the steps. Where the fallback base applies, nothing should be realised before the period for supplying acquisition data has expired.
Individual provisions with enforcement impact
Providers must apply these provisions automatically, without case-by-case review, and are liable for errors (section 44(5) EStG). Unclear rules are therefore an enforcement problem, not just a legal question.
Stablecoins and e-money tokens
The exemption in section 20(1) no. 12 sentence 3 EStG (draft) turns not on the function of the token but on its issuer: only e-money tokens issued under Title IV MiCAR are exempt — according to the memorandum only a few of the crypto assets called stablecoins. Two tokens that are both pegged 1:1 to the euro or the US dollar would be taxed differently. For stablecoins acquired elsewhere the fallback base also applies: on a sale for EUR 10,000 with a gain close to zero, the withholding would be EUR 1,318.75 (EUR 1,250 withholding tax, EUR 68.75 solidarity surcharge), about 13% of the proceeds.
The response proposes treating stablecoins and e-money tokens uniformly like foreign currency. The line is drawn by function: a 1:1 peg to legal tender, a right of redemption at par against the issuer, and reserve backing. Ongoing returns would be taxed like interest on foreign-currency balances; algorithmic tokens with a depeg risk would not qualify. In the alternative, the fallback base should fall away for pegged tokens.
Gifts, inheritance, hard forks and mergers
Section 20(4b) sentence 1 EStG (draft) sets acquisition cost at EUR 0 where exchange crypto-assets are received "free of charge". The memorandum names only airdrops and bounties, but the wording covers every gratuitous acquisition. In the response’s example, a father buys bitcoin for EUR 30,000 in 2020 and gives it to his daughter in 2027, who sells it in 2029 for EUR 90,000: if the father’s acquisition data carry over, the gain is not taxable under section 23 EStG; on a reading close to the wording, EUR 22,500 of withholding tax plus EUR 1,237.50 of solidarity surcharge would fall on the entire proceeds. The response asks that the donor’s acquisition data continue to apply on gift and inheritance, and that the zero-cost rule be limited to original receipts without a predecessor in title.
For hard forks, the ministry circular of 6 March 2025 (margin no. 67 f.) provides for a sensible split of acquisition cost by market prices; the draft and its memorandum do not mention hard forks, nor mergers. The response asks that the administrative rule be adopted and extended to mergers. Acquisition date and old/new status then pass to the new units.
Order of disposal and losses
The order of disposal decides whether old or new holdings are sold, and so between tax-free and 25%. The draft leaves it to an ordinance. The response asks that the basic rule be written into the law — FIFO per wallet or account, with priority for a documented individual allocation — and that it apply equally to section 23 EStG, which continues to apply. For established old losses a transitional rule is missing; for losses on exchange crypto-assets a carry-back should be examined, which section 20(6) EStG, unlike section 23(3) EStG, does not allow. More on wallet-by-wallet calculation is in our article Is wallet-by-wallet calculation mandatory under the BMF circular?
Cut-off date, payments and editorial points
The calendar cut-off of 1 January 2027 should not precede promulgation; substantive rules and withholding should start together, because a year of pure self-declaration without provider data is error-prone. For payments in crypto assets the response suggests a de minimis or exemption limit along the lines of section 23(3) sentence 5 EStG. Two cross-reference errors in the draft (section 52(42a) EStG, draft, and the memorandum on number 7) should be corrected.
Revenue estimate and Anlage SO
The draft shows a cash effect of up to EUR 350 million a year. Around 70% of it depends on the withholding system and its perimeter.
According to the breakdown, of EUR 350 million in full-year effect, around EUR 245 million falls on withholding tax, EUR 85 million on assessed income tax and EUR 20 million on the solidarity surcharge; EUR 179 million goes to the federal government, EUR 158 million to the states and EUR 13 million to the municipalities. Not shown, among other things, are the baseline revenue under section 23 EStG, the enforcement rate under current law, the share of additional revenue due to abolishing the holding period as against better enforcement, and the assumptions on shifts into self-custody and on loss realisation.
A reliable source exists for these starting values: since assessment year 2023, Anlage SO has reported crypto income separately, split between income from staking, lending and airdrops (section 22 no. 3 EStG) and disposal transactions (section 23 EStG) with proceeds, acquisition cost and income-related expenses. The states hold the data. To our knowledge no special analysis of them exists yet. The response asks that one be carried out and that the revenue estimate be based on it. Once the DAC 8 reports for 2026 are available, a comparison with declared income will also give a first reliable figure for the enforcement rate.
The 13 requests
Requests 4 to 13 apply if the legislature keeps the change of system.
- System question. Keep section 23 EStG for crypto assets and build up enforcement through DAC 8/KStTG, CARF, the Transfer of Funds Regulation and the AML Regulation; decide on a change of system only after the first reports have been analysed.
- Data basis. A special analysis of Anlage SO from assessment year 2023 by the states; base the revenue estimate on it.
- Regulatory impact assessment. Make up the examination of alternatives, quantify the compliance cost for states, providers and investors, and examine the budgetary risk from the open referral on the flat tax.
- Fallback base. Cap it at 30%, exclude final effect, and show its use on the tax certificate.
- Data chain. Make passing on acquisition data on a change of provider a statutory duty, a holdings report as of 31 December 2026, an official form for customer statements.
- Own-wallet transfers and perimeter. A statutory proof procedure for transfers to own wallets; include providers with a MiCAR passport and a larger domestic business.
- Cover on swaps. Blocking, gentlest realisation, a loan against collateral on request and no liability for providers; no realisation before the period for supplying acquisition data has expired where the fallback applies.
- Stablecoins. Treat stablecoins and e-money tokens uniformly like foreign currency; an official token list from the Federal Central Tax Office with no liability for providers who follow it.
- Gratuitous receipts. Limit the zero-cost rule to original receipts without a predecessor in title; carry over acquisition data on gift and inheritance; adopt the hard-fork rule (margin no. 67 f.) and extend it to mergers.
- Order of disposal and losses. Regulate FIFO per wallet or account by law; a transitional rule for old losses; examine a carry-back.
- Ongoing income and payments. Delimit section 20(1) no. 12 against mining and validator operation, regulate the time of receipt, a de minimis limit for payments.
- Date of application. A cut-off date no earlier than promulgation; substantive rules and withholding together, with at least twelve months of lead time after publication of the ordinance and interfaces.
- Ordinances and evaluation. A separate consultation round for the ordinances, interfaces tested in practice, a statutory evaluation after three years, and correction of the cross-reference errors.
What this means for investors
Until a law is promulgated, nothing changes legally. The response is a contribution to a process whose outcome is open.
- Section 23 EStG with the one-year holding period still applies. The draft is not yet law; the next step is cabinet consideration on 14 October 2026.
- Keep acquisition data, holding periods and wallet balances as of 31 December for each assessment year and the year before: under the ministry circular of 6 March 2025 the tax office can request them in individual cases (margin no. 104).
- Keep old and new holdings and your own wallets cleanly separated, and keep transfers between your own wallets provable — whether the legislature stays with the status quo or decides on a change of system.
- Our assessment of the draft itself, with the statutory text and procedural status, is in our article on the draft bill.
Questions and answers
What is the core point of the response?
Does the response change my tax position?
What do we propose if the ministry keeps the withholding system?
Why should stablecoins be treated like foreign currency?
Why does the response refer to Anlage SO?
Can I read the full response?
Matthias Steger
German certified tax advisor (Steuerberater), Diplom-Kaufmann and Diplom-Finanzwirt (FH). Expert witness before the Finance Committee of the German Bundestag on the DAC 8 directive, specialising in the taxation of crypto assets.
Status: response of 5 October 2026 on the draft of 30 September 2026, addressed to the Federal Ministry of Finance, unit IV C 1. Primary source: draft bill of the Federal Ministry of Finance, "Entwurf eines Gesetzes zur Reform der Besteuerung bestimmter Kryptowerte im Privatvermögen," Article 1 (amendments to the Income Tax Act) and its explanatory memorandum.
Case law: BVerfG, decision of 27 June 1991, 2 BvR 1493/89, BVerfGE 84, 239; BVerfG, judgment of 9 March 2004, 2 BvL 17/02, BVerfGE 110, 94; BFH, judgment of 14 February 2023, IX R 3/22; Fiscal Court of Lower Saxony, decisions of 18 March 2022 and 10 August 2022, 7 K 120/21 (referral 2 BvL 6/22).
Administration and law: BMF circular of 6 March 2025; Directive (EU) 2023/2226 (DAC 8) and the Crypto-Asset Tax Transparency Act (KStTG) of 22 December 2025; Regulation (EU) 2023/1113; Regulation (EU) 2024/1624; Regulation (EU) 2023/1114 (MiCAR).
Market data: BearingPoint/YouGov (4,149 respondents, June/July 2026); BaFin survey, April 2026. All figures as given in the response; the draft text may still change during the legislative process. The full response is available in German only. This article is no substitute for advice on your individual situation.