Germany is considering ending its one-year tax-free holding period for cryptocurrency gains, and critics are pointing directly to Austria as a cautionary tale of what happens when a country makes that move. Austria scrapped its equivalent exemption in 2022, moving to a system where crypto gains are taxed as capital income regardless of how long the coins have been held. The result, according to Bitpanda co-founder Eric Demuth — whose company is headquartered in Vienna — was an "extremely stupid decision" that created more bureaucracy and compliance complexity for users and platforms while delivering "hardly any additional benefit" for the state. Demuth has publicly warned Germany not to repeat the same mistake, and his view is echoed by OKX Europe CEO Erald Ghoos, who described Austria's approach as generating "compliance headaches for minimal revenue gain" and cited it as a failed model that pushed activity toward offshore platforms outside MiCA's regulatory reach.

The revenue math behind Germany's plan raises similar questions. The government is targeting approximately 2 billion euros in additional crypto tax revenue — a figure that sounds significant in isolation but represents roughly 0.02% of the federal budget, according to Bitpanda's spokesperson, who called the potential gains "negligible" relative to the competitive damage the change could inflict. Bitcoin and crypto tax accountant Robin Thatcher told Cointelegraph that removing the 12-month exemption would "significantly weaken Germany's pull as a crypto hub" and that other jurisdictions "should be copying this policy rather than Germany changing it." He also noted that the framing of the measure — bundled inside a 98 billion euro deficit-reduction budget alongside cuts to health, pensions, and levies on alcohol and tobacco — sends a damaging signal to investors and entrepreneurs about how the German state views the crypto asset class. "Investors and entrepreneurs notice when they are bundled in with so-called sin taxes," he said.