Germany Ends Tax-Free Crypto Holding Period, Introduces Flat Capital Income Tax

Germany's Finance Ministry has proposed a new tax regime for cryptocurrency holdings, ending the current one-year tax-free holding period and introducing a flat capital income tax of 25% plus a 5.5% solidarity surcharge, effective 26.375%. This change will apply to assets acquired on or after January 1, 2027.

The proposed law also aims to reduce the tax burden for short-term traders, who currently pay their personal income rate, up to 45%, when selling cryptocurrencies within a year. Under the new regime, they will pay a flat 26.375% on realised gains.

The ministry's justification is that cryptocurrency assets increasingly represent private capital investments and should not remain favored relative to other income types. The revenue projections indicate an additional €160 million in 2028, rising to around €350 million annually by 2031.