German Finance Ministry Drafts 25% Tax on Crypto Gains From 2027

Germany is considering a new tax on profits from cryptocurrency sales, with a flat 25% rate effective from January 1, 2027. The proposed legislation, drafted by Vice Chancellor and Finance Minister Lars Klingbeil, would apply to assets bought on or after that date, while those acquired earlier would remain subject to current regulations. Currently, German taxpayers do not pay taxes on crypto gains after holding an asset for a year, a rule set by the ministry in 2022.

Critics argue that eliminating the holding period would disproportionately impact long-term investors more than speculators, as per the original article. Under the proposed tax, profits from selling Bitcoin and Ethereum would be treated like dividends, share profits, or interest, with a flat rate plus a 5.5% solidarity surcharge, amounting to a total of 26.375% before church tax. The €1,000 saver's allowance would still apply, and losses could be offset against gains, including those on shares.

Additionally, income from lending and staking would be classified as capital income, as reported in Welt's account of the draft. However, NFTs, security tokens, some stablecoins, and real-world-asset tokens would be exempt from the new tax. Automatic withholding would commence in 2028, allowing banks and other service providers to remit the tax directly, similar to how they handle other capital income.

The draft bill argues that cryptocurrencies have evolved into a form of private capital investment, aiming to end their special status and tax treatment as other economic goods, such as classic cars or artworks. The ministry emphasizes that it is unfair for regular income and capital gains to be taxed while crypto profits remain largely untaxed.

The proposed tax is expected to generate modest revenue, estimated at €160 million in 2028, which would increase to €350 million annually by 2031. The draft bill is still in early coordination within the federal government and may undergo changes; however, both the Union and SPD parties agreed to tax crypto during their summer budget negotiations.