Germany Proposes 25% Tax on Crypto Gains Under New Draft Rules

Germany’s Finance Ministry is preparing a proposal that would fundamentally change how private investors are taxed on cryptocurrency gains, replacing the country’s current holding-period exemption with a 25% tax on profits regardless of how long an asset is held.

According to Coin Bureau, the proposal could take effect as early as 2028 and is projected to generate an additional €160 million in tax revenue in 2028, rising to €350 million annually by 2031. The plan still requires approval, and the treatment of existing cryptocurrency holdings remains unresolved.

The reported reform would bring crypto investment gains closer to the tax treatment applied to traditional financial assets. Under the current framework, private investors can generally sell cryptocurrency tax-free after holding it for more than one year, while gains from shorter-term transactions are generally subject to personal income tax rates.

Germany Moves Crypto Toward Capital Gains Tax Treatment

Under the proposed framework, the length of time an investor holds cryptocurrency would no longer determine whether gains are taxable. Instead, profits would be treated more like investment gains from stocks and other capital assets.

Recent reporting on the draft indicates that the proposed rules would apply to crypto assets acquired after Dec. 31, 2026, while holdings purchased before that date could retain their existing tax treatment. Automatic withholding by banks and crypto service providers is reportedly expected to begin in 2028, giving platforms time to adapt their reporting and tax systems.

Germany’s Federal Ministry of Finance has already been strengthening reporting and record-keeping requirements for crypto transactions. Its 2025 guidance covers areas including crypto sales, staking, lending, airdrops and tax documentation, underscoring the government’s broader effort to bring digital assets within established tax-administration frameworks.

Existing Crypto Holdings Remain a Key Question

The proposed change could have different effects across investor groups. Long-term private investors who currently benefit from the one-year exemption would face a materially different tax environment for assets covered by the new rules, while short-term investors could see their tax treatment move closer to a standardized capital-income regime.

The proposal also carries implications for Germany’s position within Europe’s cryptocurrency market. Clearer rules could simplify tax administration for authorities and service providers, but removing the long-standing holding-period exemption could alter the incentives faced by private investors.

The most immediate issue is legislative approval and the final transition rules. In particular, investors will be watching whether existing holdings retain their current tax benefits and which assets ultimately fall within the new regime.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.