Germany Plans to End Tax Free Bitcoin Gains for New Purchases

Germany is preparing legislation that would eliminate the tax exemption currently allowing private investors to sell bitcoin and other cryptocurrencies tax free after holding them for more than a year. Under the draft bill from the Federal Ministry of Finance, gains on crypto acquired after December 31, 2026 would become taxable regardless of how long an investor holds the asset, while crypto purchased before that date would remain under existing rules.

New Framework Aligns Crypto With Traditional Investments

The proposal would bring bitcoin and ether under Germany’s flat withholding tax system, applying a 25% tax rate plus a solidarity surcharge, for an effective rate of roughly 26.4% before any additional church tax. Income from crypto lending and staking would also be classified as capital income under the new rules. NFTs, certain stablecoins and some real-world asset tokens would remain outside the new framework.

Rollout Timeline Gives Platforms Time to Adjust

The law would take effect in January 2027, with crypto platforms required to begin automatically withholding taxes starting in 2028. Providers could rely on purchase price and acquisition date information supplied by customers, though investors unable to provide such records would face a flat 25% tax rate. The Finance Ministry expects the change to generate roughly 160 million euros in additional revenue in its first year, potentially rising to around 350 million euros annually by 2031. Notably, short-term traders could see reduced tax burdens under the new system compared to current rules, which tax them at personal income rates reaching as high as 45%.