- Germany is drafting a 25% flat tax on crypto gains for assets bought from January 1, 2027.
- Crypto held before the cutoff would generally keep the current one-year exemption and older tax treatment.
- The plan also adds provider withholding in 2028, but the proposal is not yet law.
Germany is developing a draft to tax crypto acquired from January 1, 2027, but the proposal is not yet law. The plan would replace the current treatment for new purchases with a 25% flat tax on gains.
Earlier holdings could remain under Germany's existing system. Private crypto gains generally remain tax-free when the asset has been held for more than one year.
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The transition would depend on the purchase date. Crypto bought before the end of 2026 would generally stay under the current rules, while later acquisitions would move into the proposed capital-income framework.
The draft is linked to Lars Klingbeil, Germany's Vice Chancellor and Federal Minister of Finance. It would treat crypto gains more like returns from other capital investments.
The resulting rate would exceed 25%. A solidarity surcharge equal to 5.5% of the tax would produce an effective rate of 26.375%, before any church tax.
The purchase date would divide old holdings from new acquisitions
The reported proposal uses the start of 2027 as the dividing line. Some descriptions refer to assets bought after December 31, 2026, while others describe purchases from January 1, 2027.
| Holding or transaction | Treatment under current or proposed framework |
|---|---|
| Crypto acquired before December 31, 2026 | Generally remains under the current system |
| Crypto acquired from January 1, 2027 | Proposed capital-income treatment |
| Private crypto held for more than one year under current rules | Generally tax-free gain |
| Provider withholding | Reportedly planned from 2028 |
The draft would not rewrite the treatment of older purchases. Tax analyses describe the proposed change as applying only to assets bought from the cutoff onward.
The plan would also shift collection toward exchanges and other providers. Automatic withholding is reportedly scheduled to begin in 2028, although that timetable depends on the proposal becoming law.
Private sales within one year remain under Germany's current rules
Under the existing framework, a private sale within one year generally places the gain under the individual income tax rate. Germany does not currently apply a separate flat capital-gains rate to that transaction.
Analyses of the current system also reference a €1,000 annual exemption for private disposal gains. Gains above that amount can become taxable when the sale occurs within the one-year period.
The treatment changes after the holding period ends. A private holder who sells after more than one year generally receives tax-free treatment under the current rule.
That rule remains operative while the draft is being developed. The proposed reform would preserve it for qualifying older holdings rather than eliminating the exemption for every asset already owned.
The draft would place new crypto gains beside dividends, shares and interest
Reporting about the draft says the government wants crypto gains brought into the framework used for dividends, share profits and interest. New crypto gains would therefore be treated as investment income instead of being governed mainly by the length of ownership.
The proposed approach would align with Germany's Abgeltungsteuer regime, the capital-income system associated with the 25% rate. The surcharge on that tax accounts for the higher effective percentage.
The change would apply to new acquisitions rather than older purchases. A person who acquired crypto before the cutoff could remain under the current holding-period approach, while a later purchase would fall into the proposed capital-income category.
Tax advisers and legal commentators have identified two practical effects. Providers would have a more direct withholding role, and the holding-period exemption would no longer govern new purchases covered by the draft.
The measure has also been described in crypto-focused commentary as the end of Germany's tax-free crypto era for new acquisitions. That description does not extend to qualifying older holdings under the transitional approach described in the proposal.
If approved, the plan would create two tax regimes based on the purchase date. Crypto bought before the cutoff would generally retain the current rules, while crypto acquired from 2027 would move into the capital-income system.
The reported withholding milestone would come in 2028. That mechanism would change how providers collect tax, while the underlying transition would begin with purchases made from January 1, 2027, if the draft becomes law.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
