Germany to Implement 25% Flat Tax on Cryptocurrency Gains Starting 2028

Key Takeaways

• German Finance Ministry proposes implementing a 25% flat tax rate on cryptocurrency profits beginning in 2028
• New taxation framework would affect digital assets purchased on or after January 1, 2027
• Existing legislation allows tax-free sales of crypto held beyond 12 months
• Projected revenue from this tax reform is approximately €350 million
• Under the proposed system, cryptocurrency losses could be deducted against losses from equities and other investment securities

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Germany is preparing to eliminate what has been considered one of the most favorable cryptocurrency tax policies in Europe. The Finance Ministry has put forward draft legislation that would impose a 25% flat tax on profits from digital asset sales beginning in 2028.

According to the proposal, this new taxation rate would apply exclusively to cryptocurrency holdings acquired on or after January 1, 2027. Whether digital assets purchased prior to this cutoff date will remain under existing tax provisions has not yet been officially clarified.

Current Cryptocurrency Tax Framework in Germany

Germany currently classifies cryptocurrency as private property. When investors dispose of Bitcoin or Ether after maintaining ownership for over one year, they incur no tax liability on realized gains.

Sales conducted within the first 12 months of acquisition trigger taxation at the individual’s marginal income tax rate, which can climb to 45% at the highest bracket.

The proposed 25% uniform rate would eliminate the long-term holding advantage for newly purchased cryptocurrency. However, for investors who trade within shorter timeframes, this change could represent a tax reduction.

This reform would integrate cryptocurrency into Germany’s established capital gains tax structure, referred to as Abgeltungsteuer. The same taxation mechanism currently governs profits from equity investments and other financial securities.

A personal exemption threshold is anticipated to continue. German tax law presently provides a €1,000 allowance for gains from private asset disposals.

Revenue Projections from Tax Reform

Finance Minister Lars Klingbeil initially announced intentions to revise cryptocurrency taxation in April, positioning it as part of a comprehensive strategy to generate €2 billion in additional government revenue while combating tax evasion.

The cryptocurrency-specific component of this initiative is forecasted to generate approximately €350 million, according to reporting by Der Spiegel.

In July, Klingbeil acknowledged that officials were developing formal legislation but withheld specific provisions while intergovernmental negotiations continued.

The draft proposal has now been distributed to other federal government departments for assessment. Before taking effect, it must secure approval from the cabinet and navigate Germany’s complete legislative procedures.

This marks the second effort to abolish the long-term holding exemption. Germany’s Finance Committee rejected a comparable initiative from the Green Party in May. The AfD party has maintained support for preserving the 12-month exemption rule and captured approximately 44% of votes in Saxony-Anhalt during this week’s elections.

German cryptocurrency regulation has been intensifying across multiple dimensions. Since the beginning of this year, the nation has implemented European Union regulations mandating that cryptocurrency service providers report customer transaction information to tax collection agencies.

Germany currently leads all EU member states in Markets in Crypto-Assets regulatory approvals, having authorized 79 providers by August, substantially ahead of France’s 35 and the Netherlands’ 29 approved entities.

Blockchain analytics firm Chainalysis calculated that Germany recorded $24.1 billion in potentially taxable on-chain cryptocurrency transactions throughout 2025.

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Source: https://blockonomi.com/germany-to-implement-25-flat-tax-on-cryptocurrency-gains-starting-2028/