Germany has prepared a 25% flat tax on cryptocurrency gains from 2028, potentially ending the country’s long-standing exemption for Bitcoin and other digital assets held for more than one year.
Summary
- Germany plans to tax crypto gains at a flat 25% rate from 2028, replacing the current system that exempts assets held for more than one year.
- The proposed rules would cover crypto assets bought after Jan. 1, 2027, while the treatment of previously purchased holdings has yet to be decided.
- The Finance Ministry expects the measure to generate roughly €350 million in additional tax revenue.
- Crypto gains could be offset against losses from stocks and other securities once digital assets are brought under the capital income tax system.
Der Spiegel reported that Germany’s Federal Ministry of Finance has drafted legislation that would bring crypto gains under the country’s capital income tax, or Abgeltungsteuer, putting them under the same 25% rate currently applied to gains from stocks and other securities.
The planned rules would apply to crypto assets acquired after Jan. 1, 2027, while the tax itself would take effect in 2028. The draft has already been circulated among other federal ministries for review, according to the report.
A personal allowance is expected to remain available. Germany currently provides a €1,000 exemption threshold for private disposal transactions.
Germany’s crypto tax would remove the one-year exemption
Under the current system, privately held cryptocurrencies do not fall under Germany’s flat capital income tax. Bitcoin, Ether and other crypto assets are instead treated as private assets, with gains potentially subject to an investor’s personal income tax rate when sold within 12 months of purchase.
Individual income tax rates can reach 45%, but crypto assets sold after more than one year are generally exempt from tax.
The proposed 25% rate would remove that holding-period benefit for assets covered by the new system. It would simultaneously reduce the potential tax rate for some shorter-term investors who currently face their personal income tax rate.
Germany had already been considering changes to crypto taxation for several months. As crypto.news previously reported in May, Finance Minister Lars Klingbeil said during an April presentation of the 2027 federal budget that the government intended to “tax cryptocurrencies differently.”
At the time, the government had not disclosed how it intended to change the system. Klingbeil linked the planned crypto changes to a package expected to raise an extra €2 billion in tax revenue while strengthening enforcement against financial and tax crime.
The latest draft provides a more specific mechanism. The Finance Ministry expects the crypto measure itself to generate roughly €350 million in additional revenue, according to Der Spiegel.
Moving crypto under the Abgeltungsteuer could create another change for taxpayers. Gains from digital assets could be offset against losses from stocks and other securities under the planned system.
People whose personal tax rate falls below 25% could request a Günstigerprüfung, a tax assessment used to determine whether applying their lower personal rate would result in a smaller tax bill.
Earlier attempt to remove the crypto tax break failed
The proposal follows an unsuccessful attempt in parliament to remove the same long-term holding exemption earlier this year.
Germany’s Finance Committee rejected a Green Party proposal in May that called for crypto assets to lose their tax-free treatment after the one-year holding period.
CDU/CSU, the Social Democratic Party and Alternative for Germany opposed the proposal, though their reasons differed. Die Linke supported it with reservations.
The SPD argued at the time that the government was already working on a separate legislative proposal covering crypto taxation, while CDU/CSU lawmakers said changes should be considered as part of a coordinated government approach.
Klingbeil’s ministry has since continued work on that legislation. During a July press conference, the finance minister confirmed that officials were preparing a concrete bill but declined to disclose its provisions while coordination within the government was still underway.
Political opposition to removing the exemption has remained visible. The AfD has backed preserving the 12-month holding period and previously submitted a Bundestag proposal calling for the rule to be maintained.
The issue returned to attention this week after the party won nearly 44% of the vote in Saxony-Anhalt. Germany’s Bitcoin tax debate remains a federal matter, meaning changes to the tax treatment cannot be made by a state government.
Chainalysis estimated Germany generated $24.1 billion in potentially taxable on-chain crypto activity during 2025. The figure included $15.6 billion in payments, $6.1 billion in realized gains and $2.4 billion in income, though the analytics company cautioned that the estimate represented activity that could potentially fall under common tax rules rather than unpaid taxes.
New rules would target crypto bought from 2027
The draft would apply the new capital income tax treatment to crypto assets purchased after Jan. 1, 2027.
Whether assets bought before that date would retain their existing tax treatment has not been settled and will need to be decided as the proposal moves through the legislative process.
The change forms part of Klingbeil’s action plan targeting tax fraud and undeclared economic activity. Ministry sources quoted by Der Spiegel argued that taxing earned income and investment returns while allowing many speculative crypto gains to remain tax-free was unfair.
Germany has been increasing oversight of digital assets on other fronts. Since January, the country has enforced the European Union’s Crypto Asset Tax Transparency Act, implementing reporting requirements that require crypto service providers to transmit customer transaction information to tax authorities.
Regulated crypto services have expanded at the same time. Germany had become the EU’s leading jurisdiction for Markets in Crypto-Assets authorizations by August, when six more cooperative banks entered the European Securities and Markets Authority register.
Their addition brought Germany to 79 authorized crypto asset service providers, ahead of France with 35 and the Netherlands with 29 at the time.
Klingbeil presented Germany’s 2027 federal budget to the Bundestag on Tuesday morning, outlining approximately €550 billion in spending alongside special funds and total new borrowing of roughly €120 billion.
Crypto taxation is one of several revenue measures being considered by the government. The governing coalition has reportedly agreed on new or higher levies in areas including alcohol and tobacco, while a tax on sugary drinks remains under discussion.
An earlier version of the drinks tax proposal was withdrawn after criticism that it would cover beverages containing sugar substitutes.
The crypto tax draft must now be reviewed by the other federal ministries before it can advance to the cabinet and then through Germany’s parliamentary process.
