Germany Cracks Down on Tax-Free Crypto Gains

Germany is revising its tax laws to bring Bitcoin and other cryptocurrencies under a new taxation regime. The draft bill from the Federal Ministry of Finance, led by Vice Chancellor Lars Klingbeil, proposes that gains on crypto acquired after December 31, 2026, be taxable regardless of the holding period.

Crypto bought before this date would remain exempt from the new rules. This change aims to treat income from cryptocurrency lending and staking as capital income, aligning it with traditional investments. The proposal also includes a tax on short-term traders, who currently face personal income rates with a 45% ceiling for high earners.

The law is expected to take effect in January 2027, with crypto providers needing to start withholding taxes automatically from 2028. This will give platforms an extra year to update their systems and comply with the new regulations.