SKN | Germany Reportedly Plans 25% Crypto Tax From 2028, Ending One-Year Exemption

Key Points

• Germany’s Finance Ministry has reportedly proposed a 25% flat tax on cryptocurrency trading profits starting in 2028.
• The proposed rules would apply to crypto assets acquired from Jan. 1, 2027, while assets purchased before the cutoff could receive grandfathering protections.
• The proposal would mark a major shift from Germany’s current framework, under which certain crypto gains can become tax-free after a 12-month holding period.

Germany Considers Major Crypto Tax Overhaul

Germany is reportedly preparing to fundamentally change how cryptocurrency investment gains are taxed, with the Federal Ministry of Finance proposing a standard 25% flat-rate tax beginning in 2028.

According to a draft proposal reviewed by German outlet Die Welt, the new taxation regime would cover crypto assets acquired after Jan. 1, 2027. The proposal has not yet been described as finalized legislation, meaning the framework could still change before implementation.

The potential reform would represent a significant change for Bitcoin, Ether and other digital-asset investors who have benefited from Germany’s treatment of long-term cryptocurrency holdings.

Grandfathering Could Protect Existing Holdings

The draft reportedly includes grandfathering provisions designed to preserve the existing tax treatment for assets acquired before the proposed cutoff.

Under the reported framework, cryptocurrency purchased before Jan. 1, 2027, could remain subject to the previous rules, potentially allowing existing long-term holders to retain the benefit of the current regime.

That distinction could become important for investors considering whether to acquire additional digital assets before the proposed transition date.

Under Germany’s current rules, private cryptocurrency gains can become fully tax-free when the assets have been held for more than 12 months. The provision has helped make Germany comparatively attractive to long-term crypto investors.

A transition toward a flat 25% tax would therefore shift the incentive structure away from extended holding periods and toward a more conventional investment-tax framework.

Government Targets Additional Revenue

Germany’s proposed changes are part of a broader effort to reform cryptocurrency taxation.

Finance Minister Lars Klingbeil first disclosed plans for a crypto tax overhaul in April, indicating that the government expected the changes to generate approximately €2 billion ($2.3 billion) in additional annual revenue.

The potential tax increase comes as governments across Europe continue refining digital-asset taxation alongside broader efforts to establish clearer regulatory frameworks for cryptocurrencies.

For Germany, the challenge will be balancing additional tax revenue with maintaining an environment capable of attracting digital-asset investment and blockchain businesses.

Potential Impact on Crypto Investors

A 25% tax on crypto profits would materially alter the economics of long-term cryptocurrency investing in Germany if the proposal becomes law in its reported form.

The grandfathering provision could create a clear divide between legacy holdings and assets purchased after the transition begins. Investors may therefore face different tax outcomes depending on when individual assets were acquired.

The proposed timing could also influence market behavior before 2027, particularly among investors who currently view Germany’s 12-month exemption as a key advantage.

However, the precise treatment of different transaction types, including trading, staking and other crypto-related income, would depend on the final legislation and implementing rules.

Outlook

Germany’s reported proposal would represent one of the country’s most significant changes to cryptocurrency taxation in years. Moving from a potential tax exemption after one year to a 25% flat rate could reshape investor behavior, government revenues and Germany’s competitiveness as a destination for digital-asset investors. The proposed grandfathering provisions may soften the immediate impact, but the final legislation will determine how broadly the new regime applies.