Germany is considering a new crypto tax regime

Germany’s Finance Ministry is reportedly considering taxing gains from Bitcoin, Ether and other exchangeable crypto assets under the country’s capital-income tax rules. Deutschlandfunk reported on September 9 that the proposal would apply a 25% tax rate to realised gains, regardless of how long an asset had been held.

The solidarity surcharge and, where applicable, church tax could raise the effective rate. However, the Finance Ministry has not published the underlying draft. The proposal is therefore not law and could change before it is submitted to parliament.

The reported plan would apply based on the date an asset was purchased. Crypto acquired before January 1, 2027, would retain the current tax treatment, while assets purchased from that date would enter the proposed capital-income regime. As a result, two purchases of the same token could be subject to different rules solely because they were made on different dates.

Existing rules would remain for older holdings

Germany currently generally treats gains from privately held crypto as income from a private disposal when an asset is sold within one year of acquisition. A sale after more than one year is generally tax-free. Gains from private disposal transactions are also tax-free when the annual total is below €1,000. Business activity and income from staking or lending may be subject to different rules.

The reported proposal would remove the one-year exemption for crypto purchased after the end of 2026, while preserving the existing treatment of older holdings. The published draft will need to clarify how the new regime would interact with current rules and whether existing annual exemptions or allowances would continue to apply.

Under current Finance Ministry guidance, exchanging one crypto asset for another counts as a disposal of the asset given up and an acquisition of the asset received. Using crypto to pay for goods or services can also constitute a disposal.

Tax records therefore need to cover more than withdrawals into euros. Acquisition dates, exchange values and transaction costs can also be relevant. A published draft will need to explain how these records would be used under the proposed capital-income system.

Withholding could begin in 2028

Automatic tax withholding would reportedly begin one year after the new tax treatment takes effect. The delay concerns tax collection and does not necessarily determine when a tax liability arises.

If the proposal is enacted as reported, a taxable gain could arise during 2027 even if a platform did not deduct tax from the transaction. The absence of automatic withholding would not necessarily mean that no tax was due.

Handelsblatt reported that the delay is intended to give providers time to establish the necessary technical processes. Until operational rules are published, an exchange should not be assumed to be able to calculate a taxpayer’s complete German tax position.

Scope for several crypto assets remains unclear

Public reporting refers to Bitcoin, Ether and other “exchangeable crypto assets.” It does not establish how the proposal would treat stablecoins, NFTs, tokenized securities, liquidity-pool positions, or rewards from staking and lending.

The draft will also need to explain how gains and losses could be offset against one another and how annual exemptions or allowances would operate. Those details could affect active traders even if the headline rate remains 25%.

The available reporting also does not explain how withholding would apply to transactions conducted through foreign exchanges, decentralized protocols or self-custodied wallets. It remains unclear what information providers would need when assets are transferred between platforms. These rules would determine which calculations service providers could perform and which records taxpayers would have to maintain themselves.

Proposal remains at an early stage

The measure remains in early government coordination. Publication of the draft would provide the first opportunity to verify its definitions, transitional rules and withholding requirements.

The Finance Ministry reportedly expects the reform to generate around €350 million in additional annual revenue by 2031. That figure describes the anticipated fiscal effect across the market, not the likely cost for an individual holder.

The German plan should not be confused with broader EU tax proposals. A separate EU proposal involving levies on crypto transactions would operate differently from a German income tax on realised gains.

Crypto holders should retain complete acquisition and disposal records, particularly for transactions made near the proposed cutoff, and seek qualified tax advice where necessary. This article is for informational purposes only and does not constitute tax, legal or financial advice.