Germany Drafts 25% Crypto Capital Gains Tax, Ending Hold Exemption
Berlin's Finance Ministry wants to scrap the one-year tax-free crypto rule, but the bill is unlegislated and faces a uncertain path through parliament.
Germany's Federal Ministry of Finance has circulated a draft proposal that would dismantle one of Europe's most investor-friendly crypto tax regimes. Under current German law, any cryptocurrency held for more than twelve months becomes entirely exempt from capital gains tax — a rule that has drawn long-term holders to Germany for over a decade. The draft, reported by Welt and Handelsblatt, would replace that exemption with a flat 25% levy, bringing crypto in line with the Abgeltungsteuer framework that already governs dividends and share profits. Factoring in the solidarity surcharge, the effective rate would land around 26.4%, though the existing €1,000 saver's allowance would remain intact and crypto losses could be offset against gains from equities.
The proposal draws a meaningful distinction between two separate dates that have been conflated in broader coverage. The new tax treatment would apply only to crypto acquired on or after January 1, 2027, preserving the current tax-free-after-one-year treatment for coins purchased before that cutoff — a grandfathering provision that limits immediate disruption. Automatic withholding at the exchange level wouldn't begin until 2028, giving platforms a year to build the necessary reporting infrastructure. Finance Minister Lars Klingbeil first signaled the overhaul in late April, and the Ministry projects it would generate roughly €160 million in 2028, rising to around €350 million annually by 2031.
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Those revenue figures offer a revealing signal about the policy's intent. A measure expected to raise €350 million at full run rate is modest by federal budget standards, suggesting this is less a fiscal power play and more a structural normalization — folding crypto into the same regulatory and tax category as conventional capital assets. That framing also aligns with the EU's DAC8 crypto reporting directive already being implemented across member states, though how the German draft would interact with DAC8 remains unresolved.
The legislative path is far from clear. This is a ministry draft, not enacted law, and it has yet to be introduced in either the Bundestag or Bundesrat. Crucially, a similar crypto tax reform proposed by the Green Party was rejected by the Bundestag's Finance Committee as recently as May — a precedent that tempers expectations. For now, the draft's primary effect is on sentiment among long-term German holders who may begin weighing whether to realize gains under the existing exemption ahead of a potential 2027 cutoff, rather than on crypto prices themselves.
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