Germany Cracks Down on Tax-Free Crypto Gains
The German government has drafted a bill to end tax-free gains on cryptocurrencies acquired after December 31, 2026. This means that private investors in Germany would lose one of Europe's most generous tax breaks for cryptocurrency. The proposal from the Federal Ministry of Finance targets crypto assets acquired after the cutoff date and would be taxed at an effective rate of 26.375%, regardless of how long an investor holds them.
The current system treats privately held cryptocurrencies as personal assets rather than financial investments, allowing investors who sell within 12 months to face their individual income tax rate, which can reach up to 45% for top earners. After the one-year mark, gains are generally exempt. The draft would flip that incentive structure, making long-term holders pay a flat rate of 25% plus a 5.5% solidarity surcharge, while short-term traders could see their tax burden fall.
The expected revenue from the proposed change is around €160 million in 2028 and would climb to roughly €350 million annually by 2031. The legislation is slated to take effect in January 2027, with crypto service providers required to begin withholding taxes automatically a year later.