Germany plans to tax crypto profits at a flat 25%, no matter how long an investor has held the asset, under a draft bill from Vice Chancellor and Finance Minister Lars Klingbeil. The document, seen by Handelsblatt and first reported by Welt, would take effect on January 1, 2027, and apply only to crypto purchased from that date onward.
The change marks a sharp break from current rules, under which Germans pay nothing on crypto gains once they have held an asset for twelve months. That exemption, set out by the ministry in 2022 and later extended to coins used for staking and lending, would remain in place for anything acquired before the new law starts.
The Draft Bill’s Core Terms
The flat 25% rate would treat crypto gains like dividends, share profits and interest. On top of that comes the solidarity surcharge of 5.5% of the tax, which brings the effective rate to 26.375% before church tax is considered. The €1,000 saver’s allowance would apply, and losses could be offset against gains, including those on shares.
Income from lending and staking would also count as capital income under the draft, per Welt’s account.
The logic is simple: crypto has outgrown its special treatment. The bill argues that crypto assets “increasingly represent a form of private capital investment,” and that the change would end a status that has treated them like other economic goods, such as classic cars or artworks.
The ministry put it more directly. “It is unfair if hard-earned income and capital gains are taxed while profits from speculation with crypto assets remain largely tax-free,” it said.
What the Tax Covers
The new regime applies to gains on crypto bought after January 1, 2027. Anything acquired earlier stays under today’s rules, so anyone already holding Bitcoin keeps the twelve-month exemption.
The draft also covers income from lending and staking, treating it as capital income at the same flat rate. The exclusions are specific:
- NFTs stay outside the regime
- Security tokens stay outside the regime
- Some stablecoins stay outside the regime
- Some real-world-asset tokens stay outside the regime
A Year for Platforms to Prepare
Automatic withholding would not begin until 2028. From that point, banks and other providers would remit the tax directly to the state, just as they do on other capital income. The one-year delay gives platforms time to build the necessary systems.
Providers could rely on purchase prices and acquisition dates supplied by customers when assets move between platforms. Where a customer cannot produce those records, the flat rate would apply regardless of how long the asset was actually held.
That provision matters for anyone who has moved crypto between exchanges over the years without keeping careful records. Under the draft, the burden falls on the investor to prove when and at what price they bought.
Who Pays and Who Does Not
The most consequential detail is the start date. Only crypto bought after January 1, 2027, falls under the new flat tax. Anyone already holding Bitcoin or other coins keeps the existing twelve-month exemption, meaning they can still sell tax-free if they have held for a year.
That split creates two very different regimes running side by side. An investor who buys Bitcoin after the law takes effect and holds it for a decade will pay 25% on the sale. An investor who bought the same coin in 2026 and holds it for twelve months pays nothing.
Critics have noted that scrapping the holding period lands on long-term investors more than the speculators the policy describes. A day trader flipping coins weekly already pays ordinary income tax on profits, up to 42% for higher earners.
The Politics Behind the Proposal
The draft is still in early coordination within the federal government and could change before it reaches parliament. The Union and SPD agreed to tax crypto during summer budget negotiations, so the political groundwork is already laid.
Revenue projections are modest. The ministry expects €160 million in 2028, rising to €350 million a year by 2031.
The framing of crypto as a “form of private capital investment” rather than an exotic asset class is deliberate. The comparison to classic cars and artworks in the bill is telling. The ministry argues crypto should not be treated like them.
The Practical Hurdles
The withholding system, when it starts in 2028, relies on platforms knowing their customers’ cost basis. The draft allows providers to use purchase prices and acquisition dates supplied by customers when assets move between platforms, which is a concession to the reality that crypto often changes hands across multiple exchanges.
But the fallback rule is strict. Where a customer cannot produce the necessary records, the flat rate applies regardless of the actual holding period.
For long-term holders who bought before 2027 and are moving assets between platforms after the law takes effect, the documentation requirement becomes critical. The draft appears to put the onus on the investor to prove their cost basis, not on the platform to track it.
What Happens Next
The draft is in early coordination within the federal government. Changes are possible, and the final bill could differ from what Handelsblatt and Welt have reported.
The summer budget agreement between the Union and SPD gives the proposal political momentum. Both parties committed to taxing crypto during those negotiations, so the principle is agreed even if the details are still being worked out.
For investors, the practical takeaway is clear. Anyone considering buying crypto in Germany faces a different tax landscape from 2027 onward. Those who already hold assets keep the current rules, but new purchases will carry a flat 25% tax on gains, collected automatically from 2028.
The ministry’s blunt statement — that it is unfair for crypto profits to remain largely tax-free — captures the intent behind the proposal.
The bill still has a long road ahead. But with the coalition parties already agreed on the principle, the direction of travel is set.
Anyone holding crypto in Germany should watch the legislative process closely. The rules for new purchases are likely to change, and the documentation requirements will matter more than they do today. The twelve-month exemption, once the cornerstone of German crypto tax policy, is set to become a relic of the past for everything bought after 2026.
Source: decrypt.co
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