Germany plans 25% tax on crypto gains from 2028

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Germany plans 25% tax on crypto

Highlights

Germany is preparing a flat 25% tax on crypto gains.
The new system is planned to begin in 2028.
Crypto bought from Jan. 1, 2027, would be covered.
The current one-year tax-free holding rule would disappear.

Germany's Federal Ministry of Finance has drafted legislation that would bring cryptocurrency gains under the country's capital income tax system, putting them on the same footing as stocks and other securities, Crypto.News reported. The ministry expects the measure to generate about €350 million in additional tax revenue.

One-year crypto exemption could disappear

Under current rules, privately held Bitcoin, Ether, and other cryptocurrencies are generally treated as private assets rather than capital investments. Gains realized within 12 months can be taxed at an investor's personal income-tax rate, which can reach 45%, while gains after a holding period of more than one year are generally tax-free.

The draft would remove that advantage for assets falling under the new system. Instead, gains would normally face the 25% Abgeltungsteuer regardless of how long the cryptocurrency had been held.

That would increase the tax burden for many long-term investors, but some short-term traders could pay less than under the current system. Investors whose personal tax rate is below 25% could also seek an assessment allowing the lower rate to apply.

Crypto moves closer to traditional securities

Bringing digital assets under capital-income taxation would also change how losses are handled. Crypto gains could potentially be offset against losses from shares and other securities, creating a more unified tax framework for investment assets.

The treatment of cryptocurrencies purchased before Jan. 1, 2027, remains unresolved and is expected to be decided during the legislative process.

The proposal follows an earlier attempt to remove the one-year exemption that failed in parliament in May. The Finance Committee rejected a Green Party initiative, while government parties indicated that a broader crypto-tax bill was already being prepared.

Germany tightens oversight of digital assets

The tax proposal forms part of a broader push to increase reporting and tax enforcement around cryptocurrencies. Germany has already implemented EU rules requiring crypto service providers to send customer transaction information to tax authorities.

The potential revenue is relatively modest at about €350 million, but the structural change is more significant. Germany has long stood out for allowing many long-term crypto gains to escape taxation entirely. Moving them under the same 25% regime as securities would fundamentally change the economics of holding Bitcoin and other digital assets for more than a year.

Earlier, we reported that South Korea tightens crypto wallet oversight ahead of 2027 tax.

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