Germany’s Federal Ministry of Finance has drafted a bill that would tax cryptocurrency gains as capital income at a flat 25% rate, ending the country’s long-standing tax-free treatment for coins held longer than one year. Once the 5.5% solidarity surcharge is added, the effective rate would be 26.375%.
The proposed rules would apply only to assets bought from January 1, 2027. Coins acquired on or before December 31, 2026 would keep their legacy status and remain eligible for the current exemption after a twelve-month holding period. This grandfathering clause means two identical Bitcoin holdings could face different tax treatment depending on whether they were purchased in December 2026 or January 2027.
From 2028, domestic exchanges and custodian platforms would be required to withhold the tax automatically at the source. Investors transferring assets between platforms would need to supply valid acquisition dates and original purchase prices. If cost-basis data is missing, the flat 25% levy would apply to the entire transaction amount rather than only to the profit, a clause that could hit long-time holders with poor records especially hard.
The draft also raises the annual tax-free allowance from €600 to €1,000 and moves staking and lending income into the flat capital gains regime. Bitcoin, Ethereum and major altcoin positions are expected to be covered, while NFTs, certain stablecoins, security tokens and real-world asset tokens would likely remain outside.
Germany’s Federal Financial Supervisory Authority, BaFin, has historically supported crypto as financial instruments, and institutional investors such as Deutsche Bank and DZ Bank have moved into crypto custody and trading. The new draft, however, targets retail tax treatment while leaving institutional structures largely intact. The Finance Ministry projects the measure would raise about €160 million in 2028, climbing to roughly €350 million per year by 2031.
The bill is still in early coordination among federal agencies and has not yet passed the Bundestag or Bundesrat. The cabinet approved a separate 2027 Income Tax Reform Act on September 2 without the crypto text, keeping the crypto tax out of the contested wealth tax package. Crypto advocacy groups have already opposed the draft, and negotiations could still change the rate, cutoff date or carve-outs before it becomes law.
