Germany proposes end to crypto tax-free rule from 2027

Germany is moving to scrap the tax exemption on Bitcoin (BTC) holdings. Coins bought before December 31, 2026 would keep their tax-free status, but any purchased after that would be subject to taxation.

The deadline appears in a finance ministry draft law. Although no legislation has been passed, German investors are already assessing the potential impact.

The Policy That Set Germany Apart

Until now, holding crypto for 12 months meant any profit was tax-free in Germany. Selling earlier triggered income tax of up to 42%.

This made the country, known for its bureaucracy, one of Europe's more attractive destinations for long-term crypto holders.

The draft, reported by Handelsblatt, would eliminate that deadline. All sales would become taxable. Gains would face a flat 25% withholding tax, matching the rate applied to shares and dividends in Germany.

INTEL: Germany plans to scrap its one-year crypto tax exemption and impose a flat 25% capital gains tax on new holdings from 2027 pic.twitter.com/IR9cTHf2uU

— Solid Intel 📡 (@solidintel_x) September 9, 2026

A solidarity surcharge would also be added. The first €1,000 ($1,163) in yearly gains would remain free, and losses could be offset against other gains for the first time.

The Catch in the Proposal

According to the ministry, the exemption encourages speculative behavior.

“It is unfair that hard-earned income and capital gains are taxed, while profits from speculation with crypto assets remain largely tax-free,” read the report, citing the German Federal Ministry of Finance.

Under the draft, speculators would actually benefit. A high-rate trader flipping coins within a year currently pays 42%. That would drop to roughly 26%.

An investor who bought and held would go from paying zero to roughly 26%. Berlin expects to collect €160 million ($186.2 million) from this change in 2028, rising to €350 million ($407.35 million) by 2031.

The proposal still needs approval from the cabinet, the Bundestag, and the Bundesrat, Germany's two parliamentary chambers. Lawmakers turned down a similar effort in May.

BeInCrypto anticipated this development in July, when the budget framework quietly targeted the tax exemption. Exchanges would begin automatically withholding the tax from 2028, in line with broader crypto tax reporting rules.

The deadline remains in effect until parliament votes.