Key facts
- Germany's Finance Ministry is preparing draft legislation to impose a 25% flat tax on cryptocurrency gains.
- The proposed tax would eliminate the current one-year holding exemption for crypto assets.
- The new rules aim to treat crypto gains similarly to other capital gains.
- The government expects the changes to generate substantial new tax revenue, estimated at €160 million in 2028 and €350 million by 2031.
- Automatic withholding by exchanges would begin in 2028.
- The law would take effect on January 1, 2027, and apply only to crypto bought from that date.
Germany's Finance Ministry is preparing draft legislation to impose a flat 25% tax on cryptocurrency gains, a significant shift that would end the existing one-year holding exemption for assets acquired after January 1, 2027. The proposal aims to align the tax treatment of crypto profits with other capital gains, with officials stating it is unfair for speculation profits to remain largely tax-free. Gains would be taxed at 25% plus a 5.5% solidarity surcharge, with a €1,000 saver's allowance applying and losses offsettable against gains. Income from lending and staking would also be taxed as capital income. The draft law, which takes effect January 1, 2027, would not apply to assets acquired before that date. Automatic tax withholding by banks and platforms is slated to begin in 2028, giving providers a year to build systems. The government anticipates modest revenue increases, estimating €160 million in 2028, rising to €350 million annually by 2031. The bill argues crypto assets increasingly represent private capital investment, necessitating an end to their special tax status. NFTs, security tokens, some stablecoins, and some real-world-asset tokens would remain outside the regime. The draft is still in early coordination within the federal government and requires cabinet approval and parliamentary review.