Crypto: Germany Prepares 25% Tax on Gains

Germany could end one of its best-known tax advantages for crypto holders. A draft from the Federal Ministry of Finance would subject gains on Bitcoin, Ethereum and other crypto assets to a flat 25% tax, even after several years of holding. The reform would apply to assets purchased from January 1, 2027, with automatic withholding planned from 2028.

Crypto: the 12-month rule could disappear

Today, German individuals can generally sell their crypto without capital gains tax if they have held it for more than 12 months. This is a particularly favorable regime in Europe, even as the EU is simultaneously strengthening its tax framework around Bitcoin and crypto assets.

According to information revealed by Die Welt, the Finance Ministry now wants to apply the Abgeltungsteuer to crypto gains, the flat-rate levy already used for certain capital income.

The base rate would be 25%, to which the solidarity surcharge and, depending on the taxpayer, church tax may be added. The German ministry currently confirms that the standard rate applicable to capital income is indeed set at 25%.

Crypto purchased before January 1, 2027, would nevertheless remain subject to the old regime. There would therefore be no general retroactive application.

2027 for the reform, 2028 for withholding

The timeline requires clarification. The new tax regime would take effect for purchases made after December 31, 2026. Crypto service providers would not begin withholding the tax automatically until January 1, 2028, however, giving them the time needed to adapt their systems.

This timeline coincides with the rollout of CARF, which still covers only part of potentially taxable crypto activity.

This brings crypto even closer to traditional financial investments. The trend extends beyond Germany. In the United Kingdom, 240 investors have already reported more than one million pounds in crypto gains each, while European tax authorities have access to more data thanks to strengthened reporting requirements.

Germany had already laid the groundwork. The Federal Ministry of Finance strengthened the documentation and reporting rules applicable to crypto assets in 2025, particularly regarding transaction histories and tax reports.

Up to €350 million in annual revenue

Berlin also expects additional revenue. Estimates reported by Handelsblatt point to around €160 million from 2028, rising to as much as €350 million per year in 2031.

Finance Minister Lars Klingbeil had already announced in the spring that he wanted to change cryptocurrency taxation. At the time, the government linked the fight against financial crime and tax evasion with new crypto taxation as part of an overall objective of generating several billion euros in additional revenue.

However, this reform remains a draft, not yet a definitively adopted law. The text is currently reportedly being coordinated within the government and may still change. This is an important distinction.

If adopted as currently drafted, Germany would nevertheless lose a feature that clearly set it apart in Europe: the ability for a long-term investor to sell their Bitcoin after 12 months without capital gains tax.

For German hodlers, 2027 could therefore become a genuine tax dividing line.