A departmental draft bill from Germany's Finance Ministry proposes a flat 25% tax on cryptocurrency gains, plus a solidarity surcharge, beginning January 1, 2027. First reported by Welt and seen by Handelsblatt, the proposed legislation would apply exclusively to digital assets purchased from that date onward, leaving holdings acquired prior to 2027 subject to current regulations.
Under existing German rules established in 2022, profits from crypto sales are entirely tax-free if the investor holds the asset for at least 12 months. Assets sold within that one-year window are currently taxed as ordinary income at rates reaching up to 42% for higher earners.
The newly drafted framework would treat cryptocurrency gains similarly to dividends, share profits, and interest. Under this system, profits would face a flat rate combined with a 5.5% solidarity surcharge on the tax, resulting in an effective rate of 26.375% before accounting for church tax. The proposal also applies a €1,000 saver's allowance and permits investors to offset losses against gains, including those generated from traditional shares. Furthermore, income derived from lending and staking would be categorized as capital income, though NFTs, security tokens, certain stablecoins, and select real-world-asset tokens would remain exempt from the regime.
To allow platforms time to build necessary infrastructure, automatic tax withholding by banks and crypto providers would not begin until January 2028. Providers will be permitted to use purchase prices and acquisition dates supplied by customers when assets are transferred between platforms. In cases where customers cannot provide this documentation, the flat rate would apply in full.
The ministry's draft argues that cryptocurrencies have outgrown their previous classification and increasingly function as private capital investments. The document asserts that ending the special tax status aligns crypto with other capital forms, with the ministry stating it is unfair for labor income and traditional capital gains to be taxed while speculative crypto profits remain largely tax-exempt.
Government projections estimate modest revenue generation from the measure, starting at €160 million in 2028 and scaling to €350 million annually by 2031. The draft remains in early coordination within the federal government and is subject to change, although the Union and SPD reached an agreement to tax crypto during summer budget negotiations.
