On February 23, Germany will hold parliamentary elections, an event that could have a strong impact on the financial sector of Europe's largest economy. The leading political parties in the race have introduced various policies related to finance, from taxing the super-rich, leaving the eurozone to deregulating Bitcoin.
The number of parliamentary seats of political parties in Germany. Source: Bundestag.
The Alternative for Germany (AfD) party, led by Alice Weidel as chancellor's candidate, is in second place in the polls. In particular, the AfD's financial policy is the most detailed and bold. They called on Germany to leave the eurozone and restore the Deutsche mark, with gold as collateral. They also wanted to bring all of Germany's gold reserves from abroad back home.
On crypto, the AfD proposes "completely removing regulations on Bitcoin, e-wallets, and cryptocurrency trading," while the German government remains cautious about the sector. In addition, they oppose the digital euro and want to include cash in the constitution as a basic citizenship.
The AfD also opposes Europe's general deposit insurance mechanism, and calls for the abolition of inheritance and wealth taxes. The party also wants to increase tax exemptions on dividends, interest rates and capital gains, in order to attract investment.
Friedrich Merz's Christian Democratic/Social Union (CDU/CSU) party is leading the polls, but its fiscal policies are only general and lack specifics.
The political situation in Germany has been tense in recent years. Source: Reuters.
The CDU/CSU wants to make Germany Europe's financial center, compete with London and Paris, and maintain a three-pillar banking system, although many experts say this model is limiting profits and the consolidation of banks. They also support the creation of a European capital markets union, a plan that has been talked about for years but has not made real progress.
In addition, CDU/CSU wants Germany to become a hub for venture capital and start-up funds, through tax incentives. They also proposed increasing the powers of the customs police to combat money laundering and financial crimes.
Crypto taxes in Germany can be as high as 45%. Source: Koinly
In terms of payment methods, the CDU/CSU is committed to maintaining cash and only supports the digital euro if it is truly beneficial. According to a survey from the European Central Bank (ECB), half of Germans said they would use the digital euro. They also want to increase inheritance tax exemptions, reduce taxes on home purchases, and oppose property taxes, a tax that has been suspended for decades.
Chancellor Olaf Scholz's Social Democratic Party (SPD) is currently third in the polls but has been involved in many coalition governments for decades. The SPD proposes to tax financial transactions, similar to some other European countries, to collect taxes on stock purchases.
They also pledged to raise taxes on the super-rich, in line with the G20 commitments. In addition, the SPD wants to reintroduce the property tax, a policy it has advocated for years but has never been implemented. They also proposed adjusting the inheritance tax to raise taxes on million-dollar and billion-dollar assets, arguing that "the super-rich should contribute more to fund social welfare."
Crypto in Germany is calculated as a personal income tax. Source: Koinly.
Similar to the SPD, the Greens also want to limit inheritance tax exemptions and tax billionaires on a global scale. They propose to establish a national center dedicated to the detection and handling of crypto-related financial crimes, assisting local governments in controlling the sector.
Germany plays an important role in the global crypto market, especially in establishing clear legal regulations and creating a safe environment for Bitcoin trading and investment. The country considers Bitcoin legal and applies tax regulations based on the holding period and intended use.
In the past, the German government has sold large amounts of Bitcoin confiscated from criminal activities, affecting the market value. In July 2024, Germany sold nearly 50,000 BTC, contributing to a sharp drop in the price of Bitcoin from 66,000 to a low of $54,400.
How the German election will impact the crypto market still needs more time to find out.