The federal government of Germany is expecting several billion euros in additional revenue from increased taxation of cryptocurrency profits.The tax reform ending an attractive exemption coincides with the full enforcement of Europe’s MiCA law, which should expand regulated access to digital assets.Germany to scrap one-year crypto holding periodThe executive power in Berlin intends to raise at least a billion euros a year more from German crypto investors, local media revealed.That’s evident from the draft federal budget for 2027 and the financial plan through 2030 prepared by the Bundesministerium der Finanzen (BMF).The proposal, excerpts of which were published by the finance ministry this week, has already been approved by the cabinet of Chancellor Friedrich Merz.It unveils that “combating financial and tax crime and introducing crypto taxation” should contribute €1 billion to the state coffers next year.While it does not provide a detailed breakdown, the document produces a concrete figure for the first time, the BTC Echo portal noted in an article on Wednesday.Quoting sources familiar with its preparation, the leading German crypto news outlet also noted that the BMF expects these budget receipts to reach €1 billion this decade (over $1.14 billion) and remarked:“This figure roughly corresponds to estimates that have recently been circulating in the crypto industry.”The government’s scheme boils down to getting rid of a tax exemption for long-term investments in cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH).Profits resulting from the sale of such assets more than 12 months after their initial acquisition have been tax-free for crypto traders in Germany until now.Crypto investments fall victim to fiscal consolidationBerlin’s intention to scrap the one-year holding period for coins is part of a larger fiscal consolidation package designed to shrink the Bundesrepublik’s budget deficit.The BMF makes it clear that the reduction of state-provided financial aid and tax breaks, while boosting the fight against financial and tax crime, is a central part of the planned measures.All of them are projected to bring around €6.2 billion (over $7 billion) in total to the 2027 federal budget. Some €3 billion is expected to come from abolishing exemptions like this.A new tax on disposable plastics should generate another €1 billion, while higher levies on tobacco and alcohol products will account for €0.8 billion and €0.4 billion respectively, the report detailed.Tax reform stirs controversy in German politicsAccording to the government’s initiative, proceeds from the disposal of privately held crypto funds will be considered income from capital gains.Thus, all profits from the sale of Bitcoin and the like will become taxable in the future, regardless of how long the assets have been held by the investor.The proposed reform is yet to be finalized and approved by German lawmakers. The first reading of the draft is likely to take place in early September and the second in mid-December.The push comes against the backdrop of the recent expiry of the transitional period for the implementation of the EU’s Markets in Crypto Assets (MiCA) regulation.The comprehensive pan-European framework is expected to eventually expand regulated access to digital assets across the 27-member European Union, although this is not the case yet.In fact, many crypto platforms are yet to obtain licenses, including major market players. Germany has so far issued the most authorizations under MiCA.In May, its federal government introduced a new requirement for crypto service providers to collect and submit user data to the country’s tax authority, as reported by Cryptopolitan.Meanwhile, the abolition of the holding period exemption is proving politically controversial in the Federal Republic, where a bill designed to impose it was already halted in the Bundestag. It was put forward by the Greens.While the Social Democratic Party (SPD) of Finance Minister Lars Klingbeil, the junior partner in the ruling coalition, supports an increase in the crypto tax burden, the center-right CDU/CSU alliance of Chancellor Merz has generally opposed the proposed changes.Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.