Germany Targets Crypto Gains With Flat 25% Tax

Germany is preparing to tax cryptocurrency gains at a flat rate of 25%, eliminating the one-year exemption period that has allowed investors in Germany to sell their Bitcoin and Ether holdings without incurring any tax obligations.

The Finance Ministry's draft proposal would consider crypto gains as capital gains, applying the 25% tax rate to all cryptocurrency sales, regardless of how long the assets were held prior to selling.

This change would eliminate the advantage enjoyed by long-term crypto investors and provide equal treatment for crypto and other investment income. Some officials have argued that it's 'unfair' that speculative crypto profits are not taxed.

The government expects the new rules will generate an additional revenue of €160m in 2028, rising to approximately €350 million by 2031. The proposal also includes automatic withholding of exchanges starting in 2028 and requires digital asset service providers to report data about their customers' transactions to the tax authorities.