Image Credit: Shutterstock
Key Takeaways
- Germany’s draft bill would end tax-free crypto sales after a 12-month holding period for assets acquired after Dec. 31, 2026, taxing them at a flat 26.375% rate instead.
- Crypto providers would begin automatically withholding taxes starting in 2028, one year after the law’s planned January 2027 effective date.
- The Finance Ministry projects about 160 million euros in additional revenue in 2028, rising to roughly 350 million euros a year by 2031.
Germany’s Federal Ministry of Finance is preparing a draft bill that would end the tax exemption letting private investors sell Bitcoin and other cryptocurrencies tax-free after holding them for more than a year.
The bill, led by Vice Chancellor Lars Klingbeil, would apply to crypto acquired after Dec. 31, 2026, according to a report by German newspaper Die Welt. Existing holdings would keep the current tax treatment.
What The Draft Bill Would Change
Under Germany’s current rules, private investors who hold Bitcoin, Ether or other cryptocurrencies for more than 12 months can sell those assets without owing capital gains tax.
That treatment has made Germany one of the more favorable jurisdictions in Europe for long-term crypto holders and has stood in contrast to countries that tax crypto gains regardless of how long an asset is held.
The draft bill would remove that holding-period exemption for any crypto acquired after Dec. 31, 2026. Gains on those newly acquired assets would become taxable no matter how long an investor holds them before selling, aligning crypto’s tax treatment more closely with how Germany already taxes gains from stocks and other traditional securities.
The proposal would also classify income earned from crypto lending and staking as capital income, bringing those activities under the same regime as trading gains.
How The New Regime Would Work
The change would move newly acquired Bitcoin and Ether into Germany’s existing flat withholding tax regime, known as the Abgeltungsteuer. That regime taxes capital gains at 25%, plus a 5.5% solidarity surcharge applied to the tax itself, for an effective rate of 26.375% before any additional church tax some taxpayers owe.
Crypto providers would be required to begin withholding those taxes automatically starting in 2028, a year after the law’s planned January 2027 effective date, giving platforms extra time to update their systems.
Providers could rely on purchase prices and acquisition dates supplied by customers when assets move between platforms to calculate the correct tax owed. Investors who cannot supply that documentation would instead face a flat 25% tax on the full proceeds, without any deduction for their original purchase price.
Certain categories of digital assets would remain outside the new regime entirely, according to the report. NFTs, some stablecoins, security tokens and some tokens tied to real-world assets would continue to be treated under existing rules rather than folded into the new capital-income framework.
Winners And Losers Under The New Rules
The proposal would not affect every crypto investor the same way. Long-term holders who buy Bitcoin after the Dec. 31, 2026 cutoff would lose the tax-free exit they currently have after a year, since gains would become taxable under the flat rate regardless of holding period.
Short-term traders, by contrast, could see a tax reduction under the new system. Crypto gains realized within a year are currently taxed at an investor’s personal income tax rate, which carries a ceiling of 45% for Germany’s highest earners.
Moving those gains to the flat 26.375% Abgeltungsteuer rate would lower the tax burden for frequent traders even as it raises the effective tax burden on investors who previously relied on the 12-month exemption to avoid tax altogether.
Revenue Projections And Implementation Timeline
Germany’s Finance Ministry expects the changes to generate approximately 160 million euros, about $186 million, in additional tax revenue in 2028, the first year automatic withholding would take effect.
The ministry projects that figure could rise to roughly 350 million euros a year by 2031 as more crypto holdings shift into the post-cutoff, taxable category over time.
The bill remains a draft proposal rather than enacted law. It would need to move through Germany’s legislative process before the planned January 2027 effective date, and its provisions, including the specific asset categories excluded from the new regime, could still change before a final version is adopted.
