Germany is considering adjusting the tax regime for crypto assets. According to a draft from the Federal Ministry of Finance, starting from January 1, 2027, profits from newly acquired crypto assets such as Bitcoin will be taxed at a uniform rate of 25%. The current exemption from taxation for those held for a full year will no longer apply to these newly added holdings.
Current tax exemption arrangements may be cancelled.
Under the current rules in Germany, if an individual holds crypto assets for more than 12 months before selling them, the related profits are usually tax-free; however, if sold within one year, they may be subject to personal income tax at a rate of up to 42%, plus a solidarity surcharge.
The new draft proposes to tax crypto earnings as capital gains. With a uniform tax rate of 25%, and after adding the solidarity surcharge, the actual tax rate is approximately 26.375%, without yet including the church tax.
Hold positions until the end of 2026 or continue to apply the old regulations.
The draft sets up transitional arrangements for existing investors. If crypto assets are purchased on or before December 31, 2026, the current regime can still be applied. This means that eligible old holdings may continue to enjoy tax exemption benefits after meeting the holding period requirements.
However, starting from 2027, newly purchased crypto assets will no longer be exempt from tax due to an extended holding period. Regardless of the length of time held, any profits from selling these assets will be subject to a unified tax rate.
The government expects to generate an additional 160 million euros in revenue.
The German government expects that the new regulations will generate an additional revenue of about 160 million euros in 2028, and by 2031 this figure may rise to around 350 million euros per year.
- Investors can enjoy a tax exemption of 1,000 euros on savings.
- Losses on crypto assets can be used to offset profits.
- Some losses can still be offset against securities investment earnings.
Automatic deduction or starting from 2028
This proposal has not yet been officially legislated, and it will still need to go through the German legislative process in the future, so the content may still be adjusted. If it is ultimately approved, the new tax system is expected to come into effect on January 1, 2027, while the automatic tax withholding arrangements for exchanges, banks, and other service institutions are expected to be implemented starting from 2028.
The German Ministry of Finance stated that it would be unfair to impose taxes on both labor income and capital gains, while speculative profits from crypto assets are largely tax-exempt. For local investors, the timing of purchases around the end of 2026 may result in two different sets of tax treatments in the future.
