Germany Proposes 25% Flat Tax on Crypto Gains From 2027
Germany is preparing to end its long-standing tax break for crypto investors who hold assets for more than one year. A new draft from the Federal Ministry of Finance proposes a 25% flat tax on crypto gains from 2027, putting Bitcoin and other digital assets closer to stocks and other investments.
Germany Wants to End the One-Year Crypto Tax Break
Under Germany’s current rules, crypto gains are generally tax-free when an investor holds an asset for more than 12 months. Selling within that period can leave investors facing their personal income tax rate, which can reach 42%, plus the solidarity surcharge.
The new proposal would remove that one-year exemption for crypto bought from January 1, 2027.
Instead, profits would be treated as capital income and taxed at a flat 25% rate. With the solidarity surcharge, the effective rate would reach 26.375%, before any church tax.
Existing Bitcoin Holdings Could Keep Tax-Free Status
The proposal includes an important grandfathering rule for existing investors.
Crypto purchased on or before December 31, 2026 would remain under the current system. That means investors who already hold Bitcoin or other qualifying assets could still use the one-year tax exemption.
For new purchases from 2027, however, the holding period would no longer remove the tax.
The change would also bring some benefits. Investors would get a €1,000 savings allowance, while crypto losses could be offset against gains, including gains from securities.
Germany Expects €160M in New Revenue
The government expects the new rules to raise around €160 million in additional revenue in 2028, increasing to about €350 million annually by 2031.
However, the proposal is not yet law. It still needs to move through Germany’s legislative process and could change before final approval.
If passed, the new tax rules are expected to apply from January 1, 2027, while exchanges, banks and other providers would begin automatic tax withholding in 2028.
The Finance Ministry defended the change by saying, “It is unfair if hard-earned income and capital gains are taxed while profits from speculation with crypto assets remain largely tax-free.”
For German crypto investors, the proposal creates a clear split, as the older holdings may keep their tax advantage, while new crypto purchases could face a 25% levy regardless of how long they are held.
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