Germany Considers Tax Overhaul for Cryptocurrency Gains

The German Finance Ministry is considering reforming its tax laws to treat cryptocurrency gains as capital income, regardless of holding period. This would mean that profits from selling cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) would be subject to a 25% withholding tax, plus other surcharges.

The current law allows individuals to hold cryptocurrencies for more than a year before selling them without incurring taxes on the gains. However, the proposed reform would abolish this 'one-year holding' exemption and move towards a system similar to that used for other financial instruments like stocks.

The new tax regime is expected to apply to cryptocurrencies acquired or received after December 31, 2026, while those purchased before this date will continue to be subject to the existing rules. The reform's impact is estimated to generate an additional €160 million in revenue by 2028 and reach €350 million annually by 2031.