Germany Proposes 25% Crypto Capital Gains Tax

Germany's Finance Ministry is reportedly drafting a proposal to introduce a 25% flat capital gains tax on cryptocurrencies, a move that would end the country's current tax exemption for long-term holdings. The proposed measure, if enacted, would apply to crypto assets acquired after January 1, 2027, with tax collection expected to begin in 2028. This initiative aims to align the taxation of digital assets with existing capital income rules. Under current German law, profits from privately held cryptocurrencies are generally tax-free after a one-year holding period. Selling assets within this twelve-month window subjects profits to an investor's personal income tax rate, which can be significantly higher. The proposed change would integrate crypto gains into the Abgeltungsteuer system, which taxes gains from dividends and shares at a flat rate. This would effectively mean a 25% tax on crypto profits, plus a solidarity surcharge, bringing the rate to approximately 26.4% before any church tax. The draft proposal suggests that eligible crypto losses could be offset against gains from other assets, such as stocks and securities.