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Germany Plans to End One-Year Crypto Tax Exemption for New Holdings
Draft would move Bitcoin and Ether gains into Germany’s capital-income tax regime
TL;DR
- Germany’s Federal Ministry of Finance is preparing to end the tax exemption available to private investors who hold qualifying cryptocurrency for more than 12 months.
- Crypto acquired from Jan. 1, 2027 would remain taxable regardless of holding period, while earlier holdings would retain existing treatment.
- Covered providers would begin automatic tax withholding in 2028 under a 25% flat-rate system.
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Germany’s Federal Ministry of Finance is preparing to end the one-year holding-period tax exemption for newly acquired cryptocurrency, with gains on crypto bought from Jan. 1, 2027 set to remain taxable regardless of how long investors hold the assets. Existing qualifying holdings would be grandfathered, while automatic withholding by covered crypto providers would begin the following year.
The proposed overhaul was detailed on Sept. 9, 2026, months after Vice Chancellor Lars Klingbeil first disclosed plans to change Germany’s crypto tax treatment at the end of April. Germany currently allows private investors to sell qualifying Bitcoin and other cryptocurrencies without paying tax on gains once those assets have been held for more than 12 months.
Under the draft, crypto purchased through Dec. 31, 2026 would continue under the existing rules. That grandfathering provision would preserve the current treatment for qualifying older holdings rather than transferring every existing crypto position into the new regime when the legislation takes effect.
Bitcoin and Ether would move to flat capital-income taxation
Bitcoin and Ether gains covered by the proposal would move into Germany’s flat withholding-tax regime, known as the Abgeltungsteuer, which treats the gains more like returns from traditional investments. The basic rate would be 25%, with a 5.5% solidarity surcharge imposed on the tax itself, producing an effective rate of 26.375% before any applicable church tax.
Income from crypto lending and staking would also be classified as capital income under the proposal. NFTs, some stablecoins, security tokens and some tokens tied to real-world assets would remain outside the new regime.
The change could produce different outcomes depending on an investor’s trading horizon. Long-term investors who currently qualify for complete tax exemption after the holding threshold would lose that benefit for newly acquired assets. Short-term traders, however, can currently face personal income-tax rates reaching a 45% ceiling for the highest earners, making the proposed flat capital-income treatment potentially lower than their existing rate.
The proposal would also place greater tax-processing responsibilities on crypto providers. Platforms could use purchase prices and acquisition dates supplied by customers when assets are transferred between providers, allowing the receiving platform to establish the investor’s acquisition history for tax purposes.
Investors unable to provide the required acquisition records would face a 25% flat tax under the draft. The approach makes purchase-price and acquisition-date records particularly relevant when investors move cryptocurrency between platforms rather than keeping assets with the original provider.
Withholding would begin after a one-year implementation period
The legislation would take effect in January 2027, while crypto providers would begin automatically withholding taxes in 2028. The gap would give platforms an additional year to update their systems before the withholding requirement starts.
The Finance Ministry expects the measure to generate about €160 million, equivalent to $186 million, in additional tax revenue during the first withholding year. Annual revenue could increase to around €350 million by 2031.
Klingbeil had previously cited a much broader revenue expectation when he first disclosed Germany’s crypto tax overhaul plans, saying at the end of April that the country expected an additional €2 billion, or about $2.3 billion, from crypto taxation. That earlier projection was presented as a broader crypto-tax revenue figure rather than the same measure-specific estimate used for the later withholding proposal.
COIN360 market snapshot showed the Bitcoin price at $78,110.42 and the Ethereum price at $2,466.77.
The Sept. 9 proposal remained a draft rather than an enacted tax rule. The Federal Ministry of Finance had been approached for additional details on the proposed legislation, but the available information contained no ministry response beyond the provisions attributed to the draft.
This article has been refined and enhanced by ChatGPT.
