Germany is advancing a proposal to adjust its crypto asset tax regime, planning to impose a flat 25% tax rate on related gains starting in 2028. This means the long-standing arrangement in the country allowing tax-free treatment for assets held over one year may no longer apply to newly purchased digital assets such as Bitcoin and Ethereum.
Long-term holding tax exemption or cancellation
According to reports, the draft was prepared by the German Federal Ministry of Finance and has been submitted to other federal agencies for review. Under the current version, the new rules will apply to cryptocurrency assets purchased after January 1, 2027, with formal taxation to begin in 2028.
Under the current German system, personally held crypto assets are generally considered private property. If sold within 12 months of purchase, gains may be subject to personal income tax; if held for more than a year, they are typically tax-exempt.
The new proposal aims to bring crypto gains under Germany’s capital gains tax system, subjecting them to a flat 25% rate, similar to gains from stocks and other securities. This would eliminate the tax exemption benefit for long-term holdings, but some short-term traders may face a lower tax rate than under the current personal income tax system.
The new regulation targets assets purchased after 2027.
According to the draft, the new tax regime will apply only to crypto assets purchased after January 1, 2027. Whether holdings acquired prior to this date will continue to be governed by the old rules has not yet been determined and will need to be clarified in subsequent legislative proceedings.
The German Ministry of Finance expects this measure to generate an additional €350 million in tax revenue. If crypto assets are officially included in the capital gains tax system, investors may in the future be able to offset crypto gains with losses from stocks and other securities.
- Taxation effective date: Implemented starting in 2028
- Applicable to assets purchased after January 1, 2027.
- Estimated revenue increase: approximately €350 million
Under Germany’s current system, taxpayers with personal tax rates below 25% can still apply to have their tax liability calculated at a lower personal rate. The report also notes that the current tax-free threshold for private disposal transactions in the country is €1,000.
The parliament had previously been divided.
German politicians debated this issue earlier this year. In May, the Bundestag’s Finance Committee rejected a similar proposal from the Green Party, which also advocated eliminating the tax exemption for crypto assets held for more than one year.
Subsequently, Finance Minister Lars Klingbeil stated that the government plans to tax crypto assets differently and integrate them into a broader initiative to combat tax fraud and unreported economic activity. In July, he confirmed that officials were preparing specific legislation, though no details were disclosed.
Germany strengthens cryptocurrency regulation in sync
In addition to tax reform, Germany has also strengthened regulation of digital assets. Since January of this year, Germany has implemented the EU’s Crypto-Assets Tax Transparency Act, requiring crypto service providers to report customer transaction information to tax authorities.
Meanwhile, Germany’s licensed crypto services market is also expanding. As of August this year, Germany led the EU in the number of authorized crypto asset service providers under the Markets in Crypto-Assets Regulation, with 79 approved providers, surpassing France and the Netherlands.