Germany Slams Brakes on Crypto Tax Exemption, Introduces Flat 25% Rate
Germany is set to tax cryptocurrency gains at a flat rate of 25% starting from 2027, effectively eliminating the one-year holding exemption that has allowed investors in Germany to sell their Bitcoin and Ether holdings without incurring any tax obligations.
The Finance Ministry's draft proposal aims to impose a uniform tax rate on all cryptocurrency sales, regardless of how long the assets were held prior to selling. Currently, crypto profits of individuals are not taxed if they have owned the assets for at least one year.
Under the current system, investors can pay personal income tax rates reaching 45% on short-term gains. The new proposal would eliminate the advantage enjoyed by long-term crypto investors, but some short-term traders might pay less than under the current tax structure.
The government expects the proposed rules to generate an additional revenue of €160m in 2028, rising to approximately €350 million by 2031. Regulated crypto trading has continued to expand in Germany's banking sector, with hundreds of cooperative/savings banks preparing for retail crypto services via traditional bank accounts.