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Bitcoin payments would become practically unusable

Why Every Bitcoin Payment Without a Holding Period Would Suddenly Become a Taxable Event

Imagine you’re buying a cup of coffee in the morning.

Not with your debit card.

Not with cash.

But with Bitcoin.

The payment takes just a few seconds. The merchant receives the money immediately. Both sides are satisfied.

But from a tax perspective, the work is just beginning.

You must document,

• exactly when you bought this Bitcoin,
• at what price,
• what their value in euros was at the time of payment,
• how much your profit or loss was,
• which purchase batch the Bitcoin used came from,
• and whether you’ve exceeded your annual exemption limit.

A simple coffee purchase suddenly becomes a tax-related transaction.

That is exactly what would happen if the one-year holding period were abolished.

For tax purposes, payment is considered a sale

What many people don’t know:

Anyone who pays with Bitcoin is considered to be selling their Bitcoin for tax purposes.

From a legal standpoint, this constitutes a so-called “sale” as defined in Section 23 of the Income Tax Act. It does not matter whether Bitcoin is first sold for euros or exchanged directly for goods or services.

From a tax perspective, the outcome is the same in both cases.

These days, that hardly makes a difference in everyday life.

Anyone who holds Bitcoin for more than a year can then sell it tax-free—or use it to make payments.

That is exactly why so many people can easily use Bitcoin as a means of payment today.

If the holding period were eliminated, however, every single payment would, in principle, be subject to taxation—regardless of whether the Bitcoin was held for ten days or ten years.

A quick example

Thomas has been buying Bitcoin regularly over the course of several years.

In 2030, he uses his Lightning wallet to pay 5 euros for a cup of coffee.

The merchant is pleased with the prompt payment.

For Thomas, on the other hand, it’s time to start calculating his taxes.

He realizes:

• Which Bitcoins were used?
• Exactly which purchase did these Satoshis come from?
• What was their purchase price?
• What profit did this generate?

And all because of a cup of coffee.

The exemption limit only seems helpful at first glance

A common objection is:

“There is, after all, the 1,000-euro exemption limit.”

Unfortunately, it’s not quite that simple.

This is because this limit does not apply to each individual payment, but rather to the total of all private sales transactions in a calendar year.

Furthermore , this is an exemption limit, not a tax-free allowance.

If the limit is exceeded by even one euro, the entire profit becomes taxable.

Above all, however, the documentation burden remains.

After all, only those who document every single Bitcoin payment will be able to prove later on whether or not the exemption limit was exceeded.

So the tax-free threshold may protect you from having to pay taxes—but not from red tape.

Lightning thrives on small payments—and on the apps of tomorrow

The Lightning Network was developed to enable Bitcoin to be used for fast and low-cost payments.

It already enables applications that would hardly be economically viable with traditional payment systems.

This includes, for example:

• buying a cup of coffee,
• Parking tickets,
• Tickets,
• Tips,
• digital newspaper articles,
• Streaming Payments,
• Micropayments in games,
• Real-time donations.

But the real potential still lies ahead of us.

More and more companies are developing applications for so-called machine-to-machine payments.

In the future, it will no longer be people who pay, but devices or software that will automatically pay on each other’s behalf.

An electric car could pay for the charging process on its own.

A solar power system could sell excess electricity directly to neighbors.

Machines could automatically order replacement parts or sell sensor data.

Developments in the field of artificial intelligence are particularly exciting right now.

There is growing discussion about the possibility that AI agents will independently purchase and pay for services in the future.

For example, an AI agent could:

• Book computing power,
• Acquire data,
• Pay for APIs,
• Purchase translations,
• Generate images,
• Use software services,

and automatically pay for each individual service within a few seconds.

Especially for such micropayments, Bitcoin via the Lightning Network is considered one of the most technically interesting solutions worldwide.

However, if every single payment also becomes a tax transaction, this technology loses a significant portion of its practical value.

Germany would thus be creating additional hurdles—of all things—for a technology of the future, while other countries are trying to facilitate precisely these innovations.

Retailers would also be held back

The discussion is often conducted exclusively from the perspective of Bitcoin owners.

Merchants also benefit from Bitcoin as a payment method.

More and more companies are accepting Bitcoin because it solves problems that traditional payment systems have so far been unable to address adequately.

This includes, for example:

• Micropayments of just a few cents,
• International payments without high fees,
• immediate payment with no risk of chargebacks,
• Payments around the clock,
• Direct transactions without an intermediary payment service provider.

New digital business models, in particular, benefit from this.

Anyone who wants to sell individual newspaper articles, AI services, or digital content for just a few cents will quickly run into financial limitations when using credit cards or traditional payment services.

Bitcoin via the Lightning Network opens up entirely new possibilities here.

However, if every single payment becomes a taxable transaction for the customer, people will automatically be less willing to use Bitcoin as a means of payment at all.

This places a burden not only on consumers.

Retailers and developers of innovative payment solutions are also losing an important market for the future.

The U.S. has long recognized the problem

Interestingly, this very issue is also the subject of intense debate in the United States.

Several bills have already been introduced there that are intended to establish so-called de minimis rules for Bitcoin payments.

The idea behind it is simple:

Not every small, everyday payment should automatically be considered a taxable transaction.

The Virtual Currency Tax Fairness Act, as originally introduced, would have exempted gains from private Bitcoin payments of up to $200 per transaction from taxation.

Recent legislative proposals—including one by Senator Cynthia Lummis—even suggest a limit of $300 per payment, with an additional annual cap.

The reasoning is noteworthy.

This is explicitly not about giving Bitcoin preferential tax treatment.

On the contrary, numerous politicians and industry representatives have recognized that tax reporting requirements would significantly hinder the development of a new payments industry.

If even the purchase of a cup of coffee or payment for a digital service must be documented for tax purposes, consumers and merchants simply won’t use Bitcoin as a means of payment.

That is why the U.S. has been debating practical de minimis thresholds for years.

Germany should follow this discussion closely.

If the holding period were ever to be abolished, a de minimis rule for smaller Bitcoin payments would be essential to avoid unnecessarily hindering innovation in the payments sector.

How big is the problem today?

We should take an honest look at the situation.

Bitcoin payments currently play only a minor role in everyday life in Germany.

Today, most people use Bitcoin primarily as a long-term store of value.

Our Bitcoin adoption study also shows that building wealth is currently much more important than making everyday payments.

However, that is precisely why it would be short-sighted to use tax measures to slow down this development at this early stage.

Many digital innovations start out as niche applications.

This applies to the Internet just as much as it does to smartphones or contactless payments.

If Germany wants to play a leading role in digital payment methods in the future, it should not impose unnecessary burdens on new technologies while they are still in their early stages of development.

Conclusion

The debate over the holding period does not affect only investors.

It also affects Bitcoin’s future as a means of payment.

Anyone who pays with Bitcoin is considered to have sold it for tax purposes.

Today, the one-year holding period ensures that Bitcoin held for the long term can be used in everyday life without any additional tax burden.

If this rule is eliminated, every single payment will require documentation.

The tax itself wouldn’t be the biggest problem.

Rather, it’s the bureaucratic burden behind every single payment.

It is precisely future technologies such as Lightning, machine-to-machine payments, and AI agents that rely on the ability to process millions of tiny payments automatically and seamlessly.

If each of these payments also constitutes a tax transaction, it creates significant hurdles for consumers, merchants, and developers alike.

Anyone who wants to promote innovation in the field of digital payments should therefore avoid creating these very obstacles.

Sources and Further Information

• § 23 of the Income Tax Act (Private Sales Transactions)
• Letter from the Federal Ministry of Finance dated March 6, 2025 – Specific Questions Regarding the Income Tax Treatment of Cryptocurrencies
• BFH, Judgment of February 14, 2023 – IX R 3/22
• Growth Opportunities Act (Exemption Limit: 1,000 euros)
• German Federal Bank – Payment Habits in Germany
• Virtual Currency Tax Fairness Act (U.S.)
• Senator Cynthia Lummis’s Proposal for a De Minimis Rule for Bitcoin Payments
• Australian Taxation Office – Assets for Personal Use
• Portugal – Taxation of Cryptocurrencies
• Bitcoin Adoption Study 2026, Peter Rochel / Oberwasser Consulting