Germany to end crypto tax-free rule, 25% tax from 2027

Germany will tax crypto gains at 25% from 2027, ending the one-year tax-free rule. Existing holdings are exempt, and the reform could generate up to €350 million annually.

Germany is preparing to overhaul its cryptocurrency tax regime, ending the current rule that allows tax-free sales of crypto assets held for over a year. A draft bill from the Federal Ministry of Finance proposes that, starting in 2027 or 2028, gains on cryptocurrencies such as Bitcoin and Ethereum acquired after December 31, 2026, will be taxed at a flat rate of 25%. This aligns crypto taxation with stocks and other capital income. The personal tax-free allowance of €1,000 will remain in place, and existing holdings bought before 2027 will keep their current tax treatment. The reform also introduces automatic tax withholding by crypto service providers and classifies income from crypto lending and staking as capital income. The government expects these changes to generate €160 million in 2028 and up to €350 million annually by 2031. With surcharges, the effective tax rate could rise to around 28%. The proposal is still subject to further government coordination and parliamentary approval.