Germany Plans 25% Crypto Tax Starting in 2028

Highlights

Germany's Federal Ministry of Finance is drafting a law to tax crypto gains at 25%, the same rate applied to stocks.
The change would take effect in 2028 and end Germany's current rule exempting crypto held over a year from tax.
The ministry estimates the change would raise an extra €350 million in tax revenue.
A €1,000 personal tax-free allowance would remain untouched.

Germany's Federal Ministry of Finance is drafting legislation that would fold cryptocurrency gains into the country's standard capital gains tax regime, taxing profits from Bitcoin, Ethereum and other digital assets at 25% starting in 2028. That is the same flat rate Germany already applies to gains from stocks and other securities. Under the draft, the personal tax-free allowance of €1,000 per year would be preserved, but the underlying rule that currently exempts crypto gains from tax entirely after a one-year holding period would disappear. The ministry projects the change would generate roughly €350 million in additional annual tax revenue once fully in effect.

Ending a Decade-Old Tax Privilege

Germany's current treatment of crypto is unusually generous by European standards: gains are classified as private-asset sales rather than investment income, meaning a holder who keeps Bitcoin or Ethereum for at least a year currently owes nothing on the profit when they sell, regardless of size. That one-year exemption has made Germany a relatively attractive jurisdiction for long-term crypto holders since the rule was first clarified for digital assets. The finance ministry's draft would replace that entirely with the flat 25% rate that already applies to dividends and capital gains on listed securities, treating crypto as just another asset class for tax purposes rather than a special case.

The move follows a broader domestic push, led in part by finance minister Lars Klingbeil's party, to close what critics have called an unjustified tax break for speculative crypto gains relative to income earned through wages. An earlier July budget draft floated a steeper 26.375% flat rate applied regardless of holding period, effective 2027; the version now moving through the ministry sets the rate at 25% and pushes the effective date to 2028, meaning it sits outside the budget year currently before the Bundestag.

What It Means for Crypto Holders and Markets

For individual German investors, the practical effect is straightforward: the tax-free strategy of buying and holding crypto for over a year to shelter gains from any tax will no longer work once the rule takes effect. That could pull forward selling activity from long-term holders ahead of the 2028 deadline, as investors weigh locking in tax-free gains under the current regime versus holding through a new tax on future appreciation. It also aligns Germany with peers like US states experimenting with their own crypto-specific tax rules and the EU's broader push, including Brussels' effort to bring DeFi activity under MiCA oversight, to treat digital assets less as a regulatory gray zone and more as a mainstream, taxable financial instrument.

The timing also matters for how Germany positions itself against jurisdictions moving the opposite direction. Some countries have used favorable crypto tax treatment to attract capital and businesses, while others, including Russia's newly effective retail crypto trading rules, have tightened oversight without necessarily raising the tax burden on gains. Germany closing its holding-period exemption removes one of the more investor-friendly features that distinguished it within the EU, even as the bloc pushes toward more harmonized crypto rules under MiCA.

What Happens Next

The proposal is still early in Germany's legislative process. Turning the draft into law requires a formal government bill (Referentenentwurf), cabinet approval, and votes in both the Bundestag and, likely, the Bundesrat — a sequence that can take months and often produces changes to the final rate or timeline. Crypto holders and tax advisers in Germany will be watching for the formal draft bill's publication, expected in the coming months, which should clarify transition rules for assets already held under the old exemption and whether the 2028 effective date survives the legislative process intact.

FAQ

When would Germany's new 25% crypto tax take effect?
The finance ministry's draft targets 2028, though the law still needs a formal bill, cabinet approval and votes in the Bundestag and Bundesrat before it is finalized.

Does this end Germany's one-year tax-free holding period for crypto?
Yes. Under current law, crypto gains are tax-free after a one-year holding period; the draft would remove that exemption and apply a flat 25% rate instead.

Will the €1,000 tax-free allowance still apply?
Yes, the draft preserves the existing €1,000 personal tax-free allowance for capital gains, including crypto.

How much extra revenue does Germany expect from the change?
The finance ministry estimates the reform would generate approximately €350 million in additional tax revenue once in effect.