- Germany is considering a flat 25% tax on crypto profits regardless of how long an asset is held, replacing the current exemption for assets held longer than one year.
- The proposed rules would take effect Jan. 1, 2027, but only apply to crypto purchased from that date, leaving previously acquired assets under the existing system.
- Automatic tax withholding by banks and other providers would begin in 2028, while staking and lending income would also be treated as capital income.
Germany could eliminate one of its biggest tax advantages for long-term crypto investors under a draft bill from Vice Chancellor and Finance Minister Lars Klingbeil.
According to reports from Handelsblatt and Welt, the proposal would introduce a flat 25% tax on profits from crypto sales regardless of how long investors hold their assets.
The new system would begin Jan. 1, 2027. However, it would only apply to crypto acquired from that date onward.
Assets purchased before 2027 would remain subject to Germany’s existing rules, preserving the current holding-period exemption for existing Bitcoin and other crypto holdings.
One-Year Crypto Tax Exemption Could End
Under Germany’s current system, crypto gains are generally tax-free when an asset is held for more than 12 months.
Selling within that period can result in profits being taxed as ordinary income, with rates reaching as high as 42% for higher earners.
The proposed legislation would remove that distinction for newly purchased crypto.
Instead, gains would be treated similarly to dividends, stock profits and interest, with a flat 25% rate.
A solidarity surcharge equal to 5.5% of the tax would increase the effective rate to 26.375% before any applicable church tax.
The €1,000 saver’s allowance would also apply, while crypto losses could be offset against gains, including profits from shares.
Staking and Lending Would Face New Treatment
Income generated through crypto staking and lending would also be classified as capital income under the proposed framework.
However, the draft would not apply the same rules to every type of digital asset.
NFTs, security tokens, certain stablecoins and some real-world-asset tokens would remain outside the new regime.
The Finance Ministry argues that crypto increasingly functions as a private capital investment and should therefore be treated more like other financial assets rather than economic goods such as artwork or classic cars.
Platforms Would Begin Withholding Tax in 2028
Banks and other service providers would not begin automatically withholding crypto taxes until 2028, giving platforms approximately one year to prepare their systems.
Providers could use purchase prices and acquisition dates supplied by customers when crypto is transferred between platforms.
If customers cannot provide the necessary records, the flat tax rate would still apply.
The government estimates the changes could generate €160 million in revenue during 2028, rising to approximately €350 million annually by 2031.
The proposal remains in an early stage of coordination within Germany’s federal government and could still change before becoming law.
