Germany Ditches Tax Exemption for Cryptocurrency Gains After One Year

The German government has announced plans to tax cryptocurrency gains at a flat rate of 25%, ending the current tax-free status for assets held over one year. The new taxation will only apply to Bitcoin, Ethereum, and other affected crypto assets purchased after December 31, 2026.

The current regulations allow individuals to sell their cryptocurrencies tax-free after a 12-month holding period, with profits taxed at the investor's personal income tax rate, which can reach up to 42% for high earners. The Ministry of Finance justifies the shift by pointing to the expansion of the crypto market and increasing use as a standard form of private investment.

The proposed change will not be applied retroactively, meaning assets acquired before December 31, 2026, will remain under the current rules, maintaining the possibility of tax-exempt profits after a one-year holding period. This creates a clear tax boundary between existing and new investments, potentially triggering a shift in behavior among German crypto investors.