Germany is preparing to change how cryptocurrency gains are taxed, with a draft bill proposing a 25% tax on profits from crypto acquired from January 1, 2027.
The proposal would end the tax advantage currently available to German crypto investors who hold assets for more than one year and then sell them tax-free.
The draft was prepared by Germany’s Federal Ministry of Finance under Finance Minister Lars Klingbeil. It still has to go through the legislative process before becoming law.
How Germany currently taxes crypto
Under Germany’s current rules, private investors can generally sell crypto tax-free if they have held it for more than 12 months.
Selling within the one-year period can instead result in the profit being taxed at the investor’s ordinary income tax rate, which can be significantly higher than 25% for high earners.
The new proposal would move crypto gains into Germany’s capital-income tax system, bringing them closer to the way gains from traditional financial investments are taxed.
The 25% tax would target new crypto purchases
The proposed change would apply to crypto acquired after December 31, 2026. That means Bitcoin and other cryptocurrencies already acquired before 2027 would keep their existing tax treatment under the draft’s grandfathering provisions.
For assets purchased from 2027, the length of time an investor holds the crypto would no longer make the gains tax-free. The proposed 25% rate would also be subject to Germany’s solidarity surcharge, making the effective rate about 26.375% before any applicable church tax.
The proposal would eventually require banks and crypto platforms to handle tax withholding automatically. That system is expected to begin in 2028, giving providers additional time to adapt their systems to the new rules.
Platforms could use information supplied by customers about acquisition dates and purchase prices when calculating taxable gains.
Germany expects more tax revenue
The Finance Ministry expects the changes to generate additional government revenue. The draft estimates about €160 million in additional revenue in 2028, rising to roughly €350 million annually by 2031.
The proposal would mark a significant change for Germany’s crypto market, particularly for long-term investors who have benefited from the existing one-year tax exemption. However, the 25% rate is still part of a draft bill and is not yet the final law.
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