Germany proposes 25% tax on crypto gains

TLDR

Germany is working on a draft law that would impose a flat 25% tax on crypto gains and end the current one year tax free rule for long term holders.

1. The Finance Ministry has drafted a law to tax crypto gains at 25% as capital income, likely from 2028, but it is not yet passed.
2. The proposal would remove Germanys one year tax exemption for new crypto purchases, while grandfathering many existing holdings and allowing loss offsets with stocks.
3. Crypto users should watch the legislative process, final details on scope and exemptions, and whether other EU states follow with similar rules.

Deep Dive

1. What Has Been Proposed

Germanys Federal Ministry of Finance has circulated a draft bill to move crypto gains into the standard capital income bucket (Abgeltungsteuer) and tax them at a headline 25% rate, similar to stock gains, according to a reported draft bill.

Reports say the rules would apply to crypto acquired after 1 January 2027, with the new regime taking effect from 2028, and are projected to raise roughly 160 million euros initially, rising toward 350 million euros per year.

This is still draft legislation. It must go through cabinet approval, Bundestag and Bundesrat votes, and publication in the Federal Law Gazette before it can take effect, and details could still change or fail.

2. How It Changes Crypto Tax

Under current German rules, private crypto gains are taxable at the personal income rate if sold within one year, but become entirely tax free if held longer than 12 months, which has made Germany attractive for long term holders.

The draft would end that one year tax break for assets bought after a cutoff (reported as 31 December 2026), moving them into capital income taxed at 25% plus a solidarity surcharge, which effectively pushes the rate to about 26.4% and near 28% where church tax applies.

Grandfathering is key: assets bought on or before the cutoff date would reportedly keep the old rule, and the bill would preserve a 1,000 euro allowance and let crypto gains and losses be netted against stocks and other securities, which is not fully possible today.

3. What To Watch Next

Three practical uncertainties still matter for crypto users in or connected to Germany:

1. Legislative path: whether the draft passes intact, gets watered down, or is blocked in parliament.
2. Scope details: how staking, DeFi, NFTs and airdrops are treated, and whether all wallet types are covered in practice.
3. Cross country competitiveness: other EU countries already tax crypto gains in the 19% to 33% range, so relative tax positions may influence where high net worth and corporate crypto activity concentrates.

Given the complexity and draft status, anyone materially exposed to German tax rules would need professional tax advice once final text is available.

Conclusion

Germanys move would align crypto more closely with traditional investments by putting it under the 25% capital income regime, but at the cost of removing a highly favorable one year tax break for new positions.

If the law passes broadly as drafted, the main shift is from hold more than a year, pay zero to pay a mid range flat rate regardless of holding period, which could change how long German investors hold crypto, where they trade, and how attractive the jurisdiction looks relative to other European markets.