By TheDailyNewsHub
Germany is preparing a major overhaul of its cryptocurrency tax rules that could see profits from Bitcoin, Ether and other crypto assets taxed at a flat rate of 25% from January 2027, according to a draft proposal from the Federal Ministry of Finance.
The proposed reform would end one of Germany’s most attractive features for long-term private crypto investors: the ability, under current rules, to generally sell cryptocurrency tax-free after holding it for more than 12 months.
The draft was reported by German business newspaper Handelsblatt after obtaining a copy of the proposed legislation.
What is changing?
Under Germany’s current rules, cryptocurrency held by private investors is generally treated as a private asset. If an investor sells after holding the crypto for more than one year, the resulting gain can generally be tax-free.
Selling within the 12-month period, however, can result in the profit being taxed at the investor’s personal income-tax rate.
The proposed reform would fundamentally change this treatment by bringing cryptocurrency gains under the 25% capital gains tax regime, regardless of how long the asset has been held.
The 25% rate would also be subject to the applicable solidarity surcharge and, where relevant, church tax.
New rule would target crypto bought from 2027
Reports on the draft indicate that the new regime would apply to crypto assets acquired from 1 January 2027.
Crypto acquired before that date would generally remain subject to the existing rules, meaning investors who already hold Bitcoin or other cryptocurrencies could retain the benefit of the current tax treatment under the proposed transition arrangements.
This distinction could become particularly important for long-term investors who have accumulated substantial unrealised gains.
Why is Germany changing the rules?
The German government has been moving to bring cryptocurrency taxation more closely in line with the taxation of other forms of investment income.
The Finance Ministry has argued that cryptocurrencies have increasingly become a form of private capital investment and that their current preferential treatment creates an imbalance compared with assets such as shares.
Finance Minister Lars Klingbeil has previously said the government wants crypto income to be taxed in the same way as other capital income. In July, he confirmed that work was underway on legislation to change the rules.
The government’s 2027 budget plans also explicitly include legislation to change the taxation of crypto-assets.
Government expects additional revenue
The proposed reform is also expected to generate additional revenue for the German government.
According to Handelsblatt’s report on the draft, the Finance Ministry estimates that the measure could generate about €160 million in additional tax revenue in 2028, rising to approximately €350 million by 2030.
The government has been looking for additional revenue as it prepares its 2027 budget and longer-term financial plans.
What does it mean for crypto investors?
If the proposal becomes law in its reported form, Germany’s crypto investors would face a significantly different tax environment from the one that has existed for years.
Long-term holding would no longer automatically provide tax-free treatment for crypto purchased after the proposed 2027 cutoff.
At the same time, the proposed system would bring crypto closer to the tax treatment of traditional investments. Reports indicate that crypto gains and losses could be treated within the capital-income framework, potentially allowing certain losses to offset gains.
The proposed system would also give financial institutions and trading platforms time to establish systems for automatic tax collection, with withholding reportedly expected to begin in 2028.
Not yet law
Despite the reports, crypto investors in Germany should note that the 25% tax is not yet a final law.
The proposal is still at the draft stage and must go through the German legislative process before it can become legally binding. Consequently, the final tax rate, implementation date and transitional arrangements could still change.
For now, Germany’s existing cryptocurrency tax rules remain in force.
If approved as proposed, however, the reform would mark one of the country’s biggest changes to crypto taxation in recent years — and could significantly alter the way German investors approach long-term Bitcoin and cryptocurrency holdings.
TheDailyNewsHub will continue to monitor the proposed legislation and its implications for cryptocurrency investors in Germany.