Germany Slams Brakes on Crypto with 25% Tax on Gains from 2027

The German Finance Ministry has drafted a new tax law that would impose a 25% levy on cryptocurrency gains, starting from January 2027. This tax would apply only to assets purchased after December 31, 2026, while those held before this date would remain exempt under the current rules.

The draft also proposes treating cryptocurrency gains as capital income, similar to dividends and share profits, with a flat rate of 25% plus a solidarity surcharge of 5.5%. The revenue from this tax is projected to reach €160 million in 2028 and rise to €350 million by 2031.

However, the draft's timeline allows for a gap between the switch date and implementation, with the law taking effect in January 2027 and digital asset service providers required to apply automatic withholding starting in 2028. The tax reform would also reclassify income from lending and staking as capital income.