Germany Targets Crypto with Flat 25% Tax on Gains from 2027

Germans who hold digital assets may soon face a new tax reality. A draft proposal from the Federal Ministry of Finance suggests introducing a 25% flat tax on crypto gains, effective January 1, 2027. This move would align profits with those made from stocks and other investments.

The current exemption for holding assets for more than one year would be abolished for new purchases starting in 2027. However, investors who bought Bitcoin or other qualifying assets before December 31, 2026, can still use the existing tax break.

Under the new rules, crypto gains would be treated as capital income and taxed at a flat rate of 25%. This translates to an effective tax rate of 26.375% when including the solidarity surcharge and any church tax. The Finance Ministry defended this change by stating that it's unfair for profits from speculation with crypto assets to remain largely untaxed.

The government estimates that the new rules will generate around €160 million in additional revenue by 2028, increasing to about €350 million annually by 2031. If passed, exchanges and banks would begin automatic tax withholding on crypto transactions in 2028.