Germany is preparing a 25% flat tax on cryptocurrency gains from 2028, potentially ending the country’s long-standing exemption for Bitcoin and other digital assets held for more than one year. The Federal Ministry of Finance has drafted legislation that would bring crypto gains under Germany’s capital income tax, or Abgeltungsteuer, placing them under the same basic 25% rate applied to many traditional investment gains.
The proposed rules would apply to crypto assets acquired after January 1, 2027, with the tax taking effect in 2028. The draft has been circulated among other federal ministries for review and is expected to generate about €350 million in additional annual tax revenue, according to current reporting.
⚖️ GERMANY MAY END THE 1-YEAR CRYPTO TAX BREAK!
➥ Proposed flat 25% tax on crypto gains
➥ Could apply to assets bought after Dec. 31, 2026
➥ Proposal targets 2027/28 pic.twitter.com/aF3nW8LXvA— Crypto Aman (@cryptoamanclub) September 9, 2026
How Germany’s 25% Crypto tax will change the appeal of long-term holding
Germany’s current system has made it one of Europe’s more attractive markets for long-term crypto investors because private gains are generally tax-free once an asset has been held for more than one year. Assets sold within that period can instead be subject to Germany’s progressive income-tax system, with rates reaching as high as 45%.
A 25% capital-gains rate would therefore change the economic incentive built into the current system. The tax advantage would no longer increase because an investor holds Bitcoin or another qualifying crypto asset beyond 12 months. Instead, the treatment would move closer to Germany’s existing framework for financial investments, making the holding period less significant when deciding when to sell.
The change would also make Germany more dependent on the standard capital-gains framework for crypto revenue. Tax Foundation data puts Germany’s existing headline capital-gains rate at 25%, with a solidarity surcharge taking the effective rate to 26.4%. The proposed crypto treatment would therefore not create an unusually high rate by German investment-tax standards, but it would remove a benefit that has helped distinguish crypto from many other financial assets.
Could Germany’s new crypto tax hurt its digital-asset industry?
Germany’s proposed tax could have effects beyond individual crypto holders because the country has spent years building a regulated digital-asset industry. Exchanges, custody providers, blockchain companies and other businesses operate within a market where taxation is only one part of the decision to maintain a presence.
The government also has a fiscal incentive to change the rules. The proposed system is expected to generate around €350 million in additional annual tax revenue. That gives Berlin a measurable reason to bring crypto closer to the tax treatment of traditional financial assets, particularly as cryptocurrency ownership and trading become more integrated into the financial system.
Germany would collect more tax from transactions that currently qualify for long-term exemptions, but it could also make the country less attractive relative to European jurisdictions with lighter crypto taxes. France applies a 30% rate to many crypto gains, while Italy and Ireland have headline rates of 33%. Spain’s rates range from 19% to 28%, compared with 8% in Cyprus for crypto disposals. Portugal can still provide a 0% rate for qualifying long-term holdings.
That difference matters for the industry because crypto businesses can serve customers across borders without requiring every part of their operations to be located in the same country. If Germany becomes less competitive on taxation while neighbouring jurisdictions offer substantially lower rates, companies may have greater incentive to structure parts of their businesses elsewhere.
Therefore, the reform could produce a mixed result for Germany. Berlin may gain additional tax revenue from crypto activity while making the sector more closely aligned with the country’s traditional financial system.
Crypto users focus on Germany’s rules for existing coins
Wallstreetx said Germany has had fairly friendly tax rules for people who hold crypto for the long term. The proposed change could therefore make some people think about where they keep their crypto and where they sell it. However, Wallstreetx also stressed that the proposal is still only a draft and has not become law.
MindMath focused on the rules for crypto that people already own. Under the reported draft, coins bought before January 1, 2027 would keep the current tax treatment, while coins bought after December 31, 2026 would no longer qualify for the one-year tax-free rule. MindMath argued that this could affect how people behave because holders of older coins may have a reason to keep them rather than sell.
ReadSayer raised another point about how the proposal has been described, saying the draft is a tax on profits made when crypto is sold, not a tax on buying crypto. The comment also stressed that the proposal is not yet law. The main point from the reaction is that the proposal is not a tax on buying crypto. It is a proposed tax on profits from selling certain crypto bought after the end of 2026. Since the rules are still being discussed, the final version could still change.
Meanwhile, in another tax development, Nigeria formally brought cryptocurrency profits and blockchain-based digital assets into its tax system after the Nigeria Revenue Service (NRS) released its first comprehensive Guidelines on Taxation of Virtual Assets.
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