Germany Weighs 25% Crypto Gains Tax From 2027, Set to End One-Year Exemption

Germany is moving toward a significant overhaul of its cryptocurrency tax rules that would scrap the current one-year holding exemption for newly purchased crypto assets. According to a draft being prepared by the Finance Ministry, capital gains on Bitcoin, Ether and other covered crypto acquired from Jan. 1, 2027 would be taxed under Germany's capital income regime, with a flat 25% rate applied regardless of how long the assets are held. Crypto acquired before that date would continue to receive the existing tax treatment under the draft. Under today's rules, individuals can generally sell privately held crypto tax-free once they have held it for more than one year. Sales made within the first year can be subject to personal income tax, depending on the taxpayer's income. The ministry argues the change is aimed at aligning crypto with the tax treatment of other investment assets, treating crypto as a form of private capital investment and removing the current distinction versus other capital income, including share-related gains. Collection could also shift toward automated withholding. The draft envisages crypto service providers withholding the tax starting Jan. 1, 2028, giving platforms a year to build the required technical systems. Purchases made during 2027 would still fall under the new framework. The Finance Ministry estimates the changes could add about €160 million in tax revenue in 2028, rising toward roughly €350 million annually by 2031. Those projections depend on the final law, taxable activity levels and how the system is implemented. Separately, Germany has expanded reporting requirements for crypto service providers through its implementation of the EU's DAC8 framework, strengthening tax transparency for crypto transactions. Those reporting rules are distinct from the proposed 25% gains tax but support broader enforcement. The proposal is still under review and is not yet law. Cabinet approval and parliamentary passage would be required, and the draft could change during the legislative process. German lawmakers have previously discussed removing the one-year exemption. In May, a Green parliamentary proposal called for taxing crypto sales through personal income tax rates, and the Bundestag indicated the federal government was also preparing stronger taxation. Finance Minister Lars Klingbeil has continued work on the government's approach, and Germany's 2027 federal budget framework signals planned legislation on crypto-asset taxation. This material is for informational purposes only and does not constitute tax, legal, financial or investment advice. Tax outcomes vary by individual circumstances; readers should consult qualified advisers regarding their obligations.