Germany Slams Brakes on Cryptocurrency Tax Exemption
The German Ministry of Finance has proposed comprehensive regulations to tax gains from cryptocurrencies, including Bitcoin and Ethereum.
The draft legislation plans to subject cryptocurrency gains to a flat tax of 25 percent, similar to stocks and other capital investments.
This is a significant change from the current system, which allows individual investors to exempt gains made by selling cryptocurrencies held for more than a year from tax.
The new regulation proposes removing this exemption and classifying cryptocurrencies as capital gains. However, it will preserve some important advantages for investors, including an annual tax exemption limit of €1,000 ($1,170) and the ability to offset crypto investment gains and losses against gains and losses from other securities such as stocks.
The new system is planned to be applied to cryptocurrencies acquired on or after January 1, 2027. The draft legislation will be submitted to parliament for approval after a review process within the government.