Germany’s Federal Ministry of Finance has proposed a 25% tax on gains from cryptocurrency acquired after December 31, 2026, potentially ending one of the country’s biggest tax advantages for long-term crypto investors.
Under the reported draft legislation, newly acquired Bitcoin, Ethereum and other cryptocurrencies would generally be subject to Germany’s 25% Abgeltungsteuer, or flat-rate capital income tax, when sold at a profit. The current rule that can make crypto gains tax-free after a holding period of more than one year would no longer apply to these new purchases.
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The proposal is not yet law. It must still go through Germany’s legislative process and could be amended, delayed or rejected.
What Would Change Under the Proposed Tax Reform?
Under Germany’s current rules, privately held cryptocurrency can generally fall under the country’s private disposal transaction regime. If qualifying crypto is held for more than one year, gains from its sale can generally be tax-free.
The proposed reform would change that treatment for cryptocurrency acquired after December 31, 2026.
Instead of becoming tax-free after one year, gains on newly acquired crypto would generally be subject to a 25% flat tax regardless of how long the investor holds the asset.
The change would bring crypto taxation closer to Germany’s existing treatment of many other forms of investment income, including securities.
What Happens to Crypto You Already Own?
The reported proposal would distinguish between cryptocurrency acquired before and after January 1, 2027.
Crypto purchased before January 1, 2027 would reportedly remain subject to the existing tax rules. In other words, the proposed 25% regime would not simply be applied retroactively to crypto that investors already own.
For example, an investor who buys Bitcoin in December 2026 and sells it in 2028 would reportedly continue to be subject to the rules that applied to that earlier purchase.
By contrast, Bitcoin purchased in January 2027 would fall under the proposed new regime if the legislation is enacted as reported.
Does the 25% Tax Apply to the Whole Crypto Sale?
The proposed 25% rate would apply to taxable gains, rather than automatically applying to the entire amount received from a crypto sale.
For example, if an investor buys cryptocurrency for €10,000 and later sells it for €15,000, the relevant gain would be €5,000, rather than the full €15,000 sale proceeds.
The final treatment of losses, transaction costs and other types of crypto income would depend on the final legislation and applicable German tax rules.
A Major Shift for Germany’s Crypto Investors
Germany has historically been considered a relatively favorable jurisdiction for individual crypto investors because of its treatment of long-term holdings.
Under the current framework, investors who hold qualifying cryptocurrency for more than one year can generally sell it without paying income tax on the gain.
The proposed reform would remove that incentive for cryptocurrency acquired from 2027 onward.
If enacted, the change could make long-term crypto investing less tax-efficient for German residents and could influence how investors approach new purchases and sales before the proposed rules take effect.
However, the reported treatment of pre-2027 holdings would preserve the existing rules for cryptocurrency acquired before the cutoff date.
The proposed legislation is still at the draft stage and must go through Germany’s legislative process before it can become law.
Yet, if enacted as proposed, the reform would remove one of Germany’s most notable tax advantages for long-term cryptocurrency holders.
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