Germany's proposed crypto taxation framework has drawn criticism from industry stakeholders concerned about its impact on retail investors. The centerpiece of the plan is a 50% default tax base that applies when investors cannot verify their purchase costs.
Patrick Hansen, an executive at Circle, the largest issuer of stablecoins licensed under the EU's MiCA framework, warned that the provision could unfairly burden ordinary investors. He noted that people who lack clean documentation of acquisition costs and those who purchased at a loss in recent years would be particularly affected.
Under the draft framework, taxpayers who fail to provide evidence of their purchase price will have their assets purchased after December 31, 2026 treated as taxable by assuming the asset's value doubled. Hansen argued this assumption appears overly optimistic given Bitcoin's recent performance and altcoin volatility, potentially resulting in taxes owed on nonexistent gains.
Documentation Requirements and Implementation Timeline
The new regime would require investors to maintain detailed records including acquisition dates, quantities, purchase costs, transaction fees, and information about platforms or wallets used. Such records can be supported by tax returns, exchange transaction records, and personal spreadsheets.
The framework would apply only to crypto assets acquired after December 31, 2026, while existing holdings would remain subject to current rules. The withholding mechanism is reportedly set to begin in 2028. This distinction means investors will need to separate older holdings from new purchases and maintain clearer transaction records.
Dr. David Hötzel, an associate partner at the Poellath law firm, acknowledged that the 50% baseline has not been finalized but noted that such a figure would impose a significant upfront tax burden on trades with minimal actual gains.
Tax Rate and Revenue Projections
Germany is also proposing a flat 25% levy on crypto capital gains, combined with a 5.5% solidarity surcharge for a total of 26.375%. Bitcoin and Ethereum would be subject to this rate, while certain digital assets including NFTs, some stablecoins, security tokens, and RWA tokens would remain exempt.
Under current German law, retail investors generally face no tax on crypto capital gains. The new framework would change this for all purchases made after December 31, 2026, regardless of holding period. Day traders could benefit, as the flat 25% rate would replace the current maximum personal income tax rate of 45%.
Government estimates project the new tax regime will generate €160 million in revenue in 2028, increasing to as much as €350 million annually by 2031.
