Germany Proposes Tax Withholding at Source for Crypto Assets from 2028

The German Federal Ministry of Finance has proposed a draft bill that would introduce tax withholding at source for crypto assets from 2028. The draft bill is set to be discussed by the federal cabinet on October 14, 2026, and if approved, it would require domestic crypto asset service providers to withhold tax on investment income from 2028. This means that for most purchases, nothing will change initially, but from 2028, the tax will be deducted directly and passed to the tax office.

The draft bill distinguishes between two points in time: January 1, 2027, and January 1, 2028. From 2027, gains from crypto assets acquired or received after December 31, 2026, will be taxed as investment income, but the tax exemption after one year of holding will fall away. From 2028, tax will be withheld at source, but only for domestic crypto asset service providers and not for self-custody, DeFi, or foreign platforms.

The ministry has sent the draft to associations and interest groups for comments, which are due by October 6, 2026. The draft proposes that crypto exchanges and other service providers will withhold the tax on gains directly and pass it to the tax office, similar to how German banks do today with shares. The tax rate for investment income would be 25 percent plus the solidarity surcharge.