Germany Proposes 50% Tax on Unproven Crypto Gains

The German government has proposed a new tax reform for cryptocurrency holdings, which could significantly impact investors. According to the draft bill, anyone who sells their coins and cannot prove their purchase price will be taxed on 50% of the sale proceeds, under a substitute assessment. This means that if an investor sells their Bitcoin for €10,000, but can only prove they bought it for €9,000, they will be taxed on €5,000, at a rate of 25%.

The substitute assessment will apply to 'exchange crypto assets', which are defined as cryptocurrencies that are accepted as a means of exchange and have not been issued or guaranteed by a central bank. This includes Bitcoin and Ether, but not tokens that are clearly securities or payment tokens with a central bank link.

The new tax regime will not apply to investors who bought their cryptocurrencies by December 31, 2026, and will instead be subject to the old rules, which include a one-year holding period. However, from 2027, purchase receipts will become a crucial document, and the loss of these records could result in a significant tax burden.