Germany Targets Cryptocurrency Tax Loophole
The German government is planning to end tax-free gains on Bitcoin and other cryptocurrencies for long-term holders. Under the new proposal, crypto assets acquired after December 31, 2026, would be subject to a flat tax rate of 25% with an additional 5.5% solidarity surcharge, bringing the effective rate to 26.375%. This change would not apply equally to all digital assets, as non-fungible tokens (NFTs), stablecoins, and certain other types of tokens would remain outside the proposed regime.
The current rules in Germany treat cryptocurrency gains differently from stock gains, allowing private investors to sell without paying tax after a one-year holding period. The new system would remove this exemption for assets purchased after the cutoff date and instead treat gains as capital income. This change could reduce the tax burden for some investors who trade frequently, as short-term crypto gains are currently subject to an investor's personal income-tax rate.
The Finance Ministry estimates that the changes would generate about 160 million euros in additional tax revenue in 2028, rising to roughly 350 million euros annually by 2031. The proposal also comes as Germany expands tax reporting for digital assets through its Crypto-Asset Tax Transparency Act, which requires covered providers to report information on users and transactions to the Federal Central Tax Office.