Germany’s 25% Crypto Tax to End Tax-Free Gains

• Germany’s draft would impose a 25% tax on crypto gains from 2028 if approved by lawmakers.
• The one-year tax exemption would end for crypto acquired after January 1, 2027.
• The Finance Ministry expects the reform to generate €350 million in annual revenue.

Germany is moving toward a major overhaul of crypto taxation, with a proposed 25% tax on cryptocurrency gains from 2028. The plan would remove the long-standing exemption for assets held beyond one year. If approved, the measure would bring crypto gains closer to the tax treatment of stocks and other securities. 

Germany Plans 25% Tax on Crypto Gains

According to a report by Der Spiegel, Germany’s Federal Ministry of Finance has drafted legislation that would classify cryptocurrency gains as capital income, bringing digital assets in line with stocks and other securities. 

Under the draft, the 25% tax would apply to cryptocurrencies acquired after January 1, 2027. However, taxation would begin in 2028, while the treatment of assets purchased before 2027 remains unresolved.

Currently, privately held Bitcoin, Ether and other cryptocurrencies can qualify for tax-free gains when sold after a holding period exceeding 12 months. Shorter-term gains can instead face personal income tax rates reaching 45%.

The proposed system would remove that holding-period advantage. Therefore, long-term crypto investors could face taxation where their gains previously qualified for an exemption.

However, the reform could reduce the burden for some short-term investors. Under the proposed capital income framework, taxpayers could generally face the 25% rate instead of higher individual income tax rates.

Germany is imposing a huge tax on Crypto

The German Federal Ministry of Finance has officially confirmed a flat tax rate of 25% on all gains from cryptocurrencies, effective January 1, 2027.

This new regulation overrides the existing exemption for gains made after holding an… pic.twitter.com/fI5h1GToLU

— BSCN (@BSCNews) September 9, 2026

A personal tax allowance would also remain available. Germany currently provides a €1,000 allowance for relevant private investment gains.

The Finance Ministry expects the measure to generate approximately €350 million in additional annual revenue. Separate projections indicate revenue could reach €160 million in 2028 before rising toward €350 million by 2031.

Crypto Tax Reform Faces Legislative Review

The proposal follows months of discussion over Germany’s crypto tax framework. Finance Minister Lars Klingbeil previously indicated that the government wanted to change how cryptocurrency profits are taxed.

In May, Germany’s Finance Committee rejected a Green Party proposal seeking to end the existing one-year exemption. The government subsequently continued developing its own legislative approach.

The new draft is part of a broader effort targeting tax fraud, money laundering and undeclared economic activity. Meanwhile, crypto gains could potentially be offset against losses from stocks and other securities under the proposed rules.

Taxpayers whose personal tax rate falls below 25% could also request a more favorable assessment. This provision could prevent some lower-income investors from paying more under the new framework.

Germany is simultaneously expanding oversight of digital assets. Since January, it has implemented the EU’s Crypto-Asset Tax Transparency rules, requiring crypto service providers to report customer transaction information.

Furthermore, Germany led the European Union in authorized crypto-asset service providers under MiCA by August. The country had 79 authorized providers, compared with 35 in France and 29 in the Netherlands.

For now, the proposed crypto tax must still undergo interministerial review before reaching the cabinet and parliament. Its final provisions, including the treatment of existing crypto holdings, could still change.