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Germany is considering significant changes to its tax policy on cryptocurrencies, as the country’s Ministry of Finance proposes a fixed tax rate of 25% on profits from crypto transactions. If approved, the new policy is expected to take effect from 2028 and apply to digital assets purchased from January 1, 2027.
This proposal could end one of the attractive tax policies for individual crypto investors in Germany. Under current regulations, profits from selling Bitcoin and other cryptocurrencies can be tax-exempt if the investor holds the assets for more than 12 months, depending on the case and transaction method. This was once considered one of Germany’s notable advantages for long-term crypto investors.
Under the new plan, profits arising from the sale of applicable crypto assets will be subject to a fixed tax rate of 25%, instead of continuing to enjoy tax exemption after a 12-month holding period. This means that a longer holding period may no longer help individual investors completely eliminate tax obligations on profits from asset sales.
However, the new policy is expected to come with a transitional mechanism to protect investments made before the change. Crypto assets purchased before January 1, 2027, will continue to be subject to current tax regulations, thereby avoiding retroactive policy changes affecting already made investments.
German Finance Minister Lars Klingbeil mentioned the plan to change the way crypto is taxed since the end of April. According to information reported by German media, the government expects that implementing the new tax mechanism could help the budget gain an additional 2 billion euros.
This move comes as Germany seeks additional revenue sources to meet the growing public spending needs. The German government currently faces significant financial pressure as it increases spending on defense, infrastructure, and investment programs in the coming years. The federal budget for Germany for 2027 is proposed at more than 555 billion euros, while the government also plans to significantly increase borrowing to fund long-term investments.
