Flat 25% Tax to Replace Loophole
Germany’s Ministry of Finance has published a draft bill that would overhaul how crypto gains are taxed, proposing a flat 25% rate on digital asset profits.
The proposal, which was reportedly seen by local outlet Die Welt on Wednesday, outlines that this tax would be levied starting in 2028. The Ministry expects this change could generate an additional €2 billion (about $2.3 billion) in annual revenue for the German government once implemented. This marks one of the most significant shifts in German crypto taxation since the original law exempting long-term holders was introduced.
2027 Cutoff Splits Old, New Assets
A key feature of the draft bill is its clear division between existing and future crypto holdings: assets purchased before January 1, 2027 will retain their current tax treatment, while those bought from that date forward will be subject to the new rules.
This means that anyone holding bitcoin or other cryptocurrencies prior to the cutoff can still benefit from the old rule—tax-free sales after twelve months—while newer investors will face a uniform tax rate regardless of holding period. The contrast is sharp: existing holders are effectively grandfathered in, while newcomers lose access to what has been one of Europe’s most generous crypto tax exemptions.
For many German investors, timing will be everything.
Crypto Gains Face Stock-Like Treatment
The draft bill aligns crypto with stocks in terms of taxation. Profits from digital assets—including those earned through lending and staking—would be categorized as capital income. Notably, gains would be taxed at 25%, plus a solidarity surcharge of 5.5%, resulting in an effective rate of 26.375% before any church tax is considered. The €1,000 saver's allowance would continue to apply, giving small investors some relief.
Losses could also be offset against gains, both within crypto holdings and across other capital assets like shares. This approach mirrors existing capital gains taxation for equities and aims to simplify reporting for taxpayers and authorities alike. Automatic tax withholding by banks and service providers is set to begin in 2028, giving platforms a year to adapt their systems for compliance.
As reported by decrypt.co, Finance Minister Lars Klingbeil spearheaded this proposal following his announcement at the end of April regarding a comprehensive overhaul of crypto taxes. The move signals Berlin’s intent to bring digital asset taxation in line with traditional finance rules—and possibly reduce regulatory arbitrage opportunities that have emerged under the current system.
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No More 12-Month Tax-Free Rule
Under current German law, individuals can sell their cryptocurrency holdings completely tax-free if they have held them for more than twelve months—a provision not available for stocks or other financial products. The new bill targets this specific exemption by eliminating it for all assets acquired from 2027 onwards. Instead, every euro of profit from these “new” coins or tokens will face the same flat-rate levy as short-term trades.
Yet while the headline number is a straightforward 25%, the context is messier: only future acquisitions will be affected by this change, leaving a patchwork landscape where some portfolios remain partially shielded depending on purchase dates. It’s unclear how this split regime will impact investor behavior or whether it could prompt a rush into crypto before the cutoff date arrives.
What may drive the next phase
If Germany's proposed 25% flat-rate crypto tax—set to apply to assets acquired from January 1, 2027—advances toward parliamentary approval, immediate attention will focus on whether existing grandfathering protections for pre-2027 holdings remain intact in the final legislation, as any change could instantly affect current investor strategies.
