The German federal government is planning a fundamental reform of how cryptocurrencies are taxed. According to a draft paper from the Federal Ministry of Finance, gains made from selling assets such as Bitcoin and Ether will become taxable irrespective of how long the assets were held. These new regulations will apply to holdings acquired after the draft’s introduction and are slated to lead to an automatic tax deduction starting in 2028.
Currently, profits from crypto assets are generally tax-exempt if the holding period exceeds twelve months. Under the forthcoming rules, capital gains resulting from trades, as well as income generated through lending and staking, will be classified as capital income and subjected to the flat capital gains tax. This change would eliminate a specific tax status that previously differentiated cryptocurrencies from shares and mutual fund units. It is understood that this project is currently in the preliminary coordination phase within the government, meaning further changes to the legislative process are possible.
Important safeguards are in place for existing investors. The reform will only apply to crypto assets acquired or entering the portfolio after December 31, 2026. Bitcoin and other cryptocurrencies purchased previously will remain subject to the current regulations. The law is scheduled to take effect on January 1, 2027, but the automatic tax withholding by crypto service providers is not expected until January 1, 2028. This later date allows platforms time to implement the necessary technical procedures.
The Ministry of Finance justifies the reform by citing the growing importance of the cryptocurrency market. Cryptocurrencies are increasingly used by private investors as a form of capital investment; due to their high liquidity and primarily speculative use, they are viewed as comparable to traditional assets rather than other types of economic goods. The new rules will specifically cover Bitcoin and Ether, although the draft exempts assets such as Non-Fungible Tokens (NFTs), certain stablecoins, security tokens, and other crypto assets tied to real-world assets.
From a financial standpoint, the Ministry estimates the reform will bring in approximately 160 million euros in additional tax revenue starting in 2028. This revenue is projected to increase to about 350 million euros annually by 2031, of which roughly 75 million euros will initially go to the federal government, rising later to around 160 million euros.
In the future, crypto service providers will be responsible for deducting the tax directly. Since the buying and selling of crypto assets often occurs across multiple trading platforms, the proposal allows for the partial use of investor data regarding acquisition costs and purchase dates. If this data cannot be verified, the regulations stipulate that lump-sum tax rules will apply instead.
