Germany’s Federal Ministry of Finance has drafted a bill that would slap a 25% flat withholding tax on crypto gains, but only for assets purchased after December 31, 2026. Everything you already own? Still governed by the old rules.
It’s the kind of policy move that rewards early adopters and gives everyone else a deadline. The draft law, unveiled in mid-August 2026, would take effect on January 1, 2027, with automatic tax withholding by service providers kicking in a year later on January 1, 2028.
What the new tax regime actually looks like
Under the proposal, crypto assets acquired after the cutoff date would be reclassified as capital income under §20 of Germany’s Income Tax Act (EStG). That subjects them to the standard 25% flat-rate withholding tax, plus Germany’s solidarity surcharge. The combined effective rate comes to roughly 26.375%.
For context, that’s the same tax treatment Germany applies to stock dividends and bond interest. The bill also includes a few features designed to soften the blow. Losses on crypto can be offset against gains from shares and other securities. There’s a continued saver’s allowance of €1,000 for individuals. And for people whose marginal tax rate falls below 25%, a “favorability check” would apply the lower rate instead.
The grandfathering clause is the headline
The most consequential piece of this legislation is what it doesn’t touch. Assets acquired on or before December 31, 2026, will continue to benefit from Germany’s existing crypto tax framework under §23 EStG. That means the one-year holding period exemption remains intact: hold your Bitcoin or Ether for at least 12 months, and any gains are completely tax-free, provided they stay under the annual exemption limit of €1,000.
This is the first time Germany has introduced an explicit grandfathering date for crypto tax purposes. It draws a bright line between old holdings and new ones, creating what amounts to a two-tier system.
Revenue expectations and political context
The bill is being championed by Finance Minister Lars Klingbeil of the SPD, and it fits neatly into Germany’s broader budget consolidation push. The government projects the new crypto tax will generate approximately €160 million in additional federal revenue in 2028, its first year of automatic withholding. By 2031, that figure is expected to climb to around €350 million annually.
The draft still needs approval from both the Bundestag and the Bundesrat, Germany’s two legislative chambers.
What this means for the market
The flat-rate model eliminates much of the complexity that previously surrounded German crypto taxes. Under the old system, the tax treatment depended heavily on holding periods, staking activity, and whether assets were classified as private sales. The new framework simplifies that calculus for anything purchased after the cutoff: you buy it, you sell it at a gain, you pay 26.375%.
The loss-offsetting provision allows crypto losses to be netted against stock and bond gains, making portfolio-level tax planning significantly easier.
The grandfathering clause creates an incentive to accumulate crypto before the December 31, 2026 cutoff. Investors who buy before that date lock in the more favorable tax treatment permanently for those specific holdings.
The gap between the law’s effective date in January 2027 and the start of automatic withholding in January 2028 gives exchanges and brokers a full year to build compliance infrastructure.