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International providers can only be required to pay taxes to a limited extent

Why a crypto tax does not automatically mean that every exchange can collect taxes on behalf of the German tax authorities

When the abolition of the Bitcoin holding period is discussed, it is often suggested that taxation be structured similarly to that of stocks in the future.

At first glance, the idea sounds simple:

When Bitcoin is sold, the exchange automatically withholds the tax and transfers it to the tax office.

But this is exactly where the practical problem begins.

Bitcoin does not function like a traditional securities account. Cryptocurrencies can be transferred between exchanges, wallets, and countries. This makes the question of who should calculate and collect the tax significantly more complicated.

A Real-World Example

Let’s say Max buys Bitcoin on Coinbase in 2026.

In 2028, he will transfer his coins to a hardware wallet.

In 2030, he will send the Bitcoin to Bitpanda and sell it there.

If Bitpanda is now required to automatically withhold tax for the German tax authorities, this raises a simple question:

How does Bitpanda actually know when Max bought his Bitcoin?

And how does Bitpanda know:

• the original purchase price?
• Possible partial sales in the past?
• the actual acquisition costs?
• The tax treatment of cryptocurrencies?

Bitpanda only sees:

Bitcoin was deposited and then sold.

The entire history may lie outside our own system.

This is exactly where Bitcoin differs fundamentally from a traditional stock portfolio.

The real problem isn’t the tax liability

There is one thing we must clearly distinguish:

The question is not whether Germany is allowed to tax crypto gains.

Of course, Germany is allowed to do this.

Anyone who is a tax resident of Germany is generally subject to taxation on their worldwide income—regardless of which platform they use for trading.

The crucial question is rather:

Who should calculate and collect the tax?

And this is exactly where things get complicated.

European providers could be required to

The European MiCAR regulation has changed the landscape.

Providers with a European MiCAR license can offer their services throughout the European Union through a process known as “passporting.”

This includes, for example:

• Bitpanda
• Coinfinity
• Relai
• 21bitcoin
• Bison
• Other providers regulated in Europe

In principle, it would be possible to impose additional tax obligations on these companies.

The European Union can require regulated providers within its jurisdiction to comply with certain requirements.

The claim that international providers cannot, as a matter of principle, be regulated would therefore be too sweeping today.

But that doesn’t solve the real problem.

Bitcoin isn’t just traded on regulated exchanges

Bitcoin is fundamentally different from traditional securities.

Stocks typically remain within a securities account and banking system.

Bitcoin, on the other hand, can at any time:

• be transferred to a hardware wallet,
• switch between different stock exchanges,
• are traded directly between private individuals,
• be used on decentralized exchanges (DEXs),
• or held by providers outside Europe.

This freedom of movement is one of Bitcoin’s key features.

As soon as coins are transferred between different platforms and wallets, it becomes much more difficult to accurately determine the tax-related acquisition data.

The government already receives extensive registration data

In recent years, extensive international reporting requirements have been adopted through CARF (Crypto-Asset Reporting Framework) and DAC8.

In the future, cryptocurrency service providers will be required to collect extensive information about their customers and their transactions and report it to the tax authorities.

This data is then exchanged among the participating countries.

This creates one of the most comprehensive reporting and monitoring systems ever developed for private assets.

Regardless of how one views this development, one thing is certain:

The government already receives significantly more information about crypto transactions than it did just a few years ago.

More surveillance does not automatically solve practical problems

However, the new reporting requirements do not alter the fundamental characteristics of Bitcoin.

Bitcoin will continue to be able to:

• be transferred to your own wallets,
• switch between different platforms,
• are traded via peer-to-peer transactions,
• or used in decentralized applications.

As a result, the authorities do receive more information than they used to.

However, the question of which exchange should calculate and withhold the tax and be liable for its accuracy remains unresolved.

Who is liable for errors?

Suppose a customer buys Bitcoin on Coinbase, holds onto it for several years, and later sells it on Bitpanda.

Bitpanda would now have to calculate the tax.

But what happens if:

• the original purchase price isn’t documented correctly?
• Are previous transactions unknown?
• Are the purchase details missing?
• What if a customer provides incorrect information?

Who is liable in this case?

• The customer?
• The stock market?
• The government?

These liability issues show that automatic tax withholding for cryptocurrencies is significantly more complex than for a traditional securities account.

National deviations from the norm create competitive disadvantages

The situation becomes particularly problematic when individual states come up with their own special solutions.

If European providers were required to implement additional tax obligations, this would result in significant costs:

• new software
• additional compliance departments
• tax documentation
• Liability Management
• Customer Support

Large international platforms can more easily bear such costs.

Smaller providers and startups have a much harder time.

The result would be greater market concentration and a competitive disadvantage for Europe as a business location.

A Look at Austria

Austria is often cited as a role model.

The holding period has already been abolished there.

Domestic providers such as Bitpanda automatically withhold capital gains tax on behalf of Austrian customers.

The implementation required numerous special rules and technical adjustments.

Despite the considerable effort involved, Austria’s total crypto tax revenue in 2024 amounted to only about 33.8 million euros.

This amounts to less than one percent of Austria’s total capital gains tax revenue.

The Austrian experience shows:

Automatic taxation is possible, but it is technically complex and, from a fiscal perspective, significantly less revenue-generating than is often assumed.

The real goal should be better enforcement

Proponents of eliminating the holding period often argue that new reporting requirements would simplify taxation.

In fact, however, these are two different questions.

CARF and DAC8 pertain to government information gathering.

The elimination of the holding period affects the tax treatment of long-term Bitcoin investments.

Collecting more data does not automatically lead to a better or fairer tax policy.

This raises the question of whether additional tax burdens are even necessary when a far-reaching international reporting and monitoring system is already being established.

Conclusion

The discussion about a new crypto tax is often framed as if the stock market model could be easily applied to Bitcoin.

The reality is much more complex.

While providers regulated in Europe may, in principle, be subject to additional obligations under MiCAR, Bitcoin does not operate exclusively within this regulated infrastructure.

Coins can be transferred at any time between exchanges, personal wallets, and different countries.

CARF and DAC8 already provide tax authorities with extensive information on crypto transactions. However, they do not automatically resolve the question of who should calculate and collect the tax and who should be liable for errors.

A special national solution would primarily burden regulated European providers, while the real challenges—self-custody, cross-border transfers, and international platforms—would remain.

Through CARF and DAC8, the government already has extensive insight into crypto transactions. Eliminating the holding period would therefore not create any fundamentally new oversight capabilities, but it would impose additional bureaucracy on providers and weaken Europe’s position in international competition.

Sources and Further Information

• OECD Crypto-Asset Reporting Framework (CARF)
• DAC8 – Directive (EU) 2023/2226
• Crypto Asset Tax Transparency Act (KStTG)
• MiCAR – Regulation (EU) 2023/1114
• BFH, Judgment of February 14, 2023 – IX R 3/22
• OECD CARF Commitment List (as of 2025)
• FATF Reports on Self-Custody and DeFi
• Austrian Income Tax Act (Section 27b and Section 93 EStG-AT)
• Parliamentary Inquiry, Austria 1948/AB (Crypto Tax Revenue 2024)