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BTC Germany plans to impose a flat tax rate of 25% on profits from cryptocurrency sales
According to Handelsblatt, German Deputy Chancellor and Finance Minister Lars Klingbeil has proposed a draft bill to tax profits from cryptocurrency sales at a fixed tax rate of 25%, regardless of the length of time the asset is held. The news was first reported by Welt on Tuesday, citing a departmental draft released in mid-August.
The new law will take effect on January 1, 2027 and will only apply to cryptocurrencies purchased after that date. Assets acquired before this date will still be subject to current rules, so individuals who currently hold crypto assets such as Bitcoin will continue to enjoy tax-free treatment. According to the regulations established by the German Ministry of Finance in 2022 and extended to tokens used for pledge and borrowing, Germans currently do not need to pay any tax on the value-added portion of cryptographic assets as long as they hold them for twelve months. If sold within this window, profits will be taxed as ordinary income, with a maximum tax rate of 42% for high-income earners. Critics point out that the move to eliminate holding periods actually hits long-term investors harder than speculators.
Under the new system, earnings will be taxed at a fixed rate like dividends, stock profits and interest, with a 5.5% solidarity tax, with an effective pre-tax rate of approximately 26.375%(excluding church tax). At the same time, a savings tax exemption of € 1,000 will still apply and losses can also be used to offset gains, including stock gains.
According to Le Monde's report on the draft, income from loans and pledges will also be regarded as capital income. However, non-homogeneous tokens (NFTs), security-based tokens, some stablecoins, and some real-world asset tokens will be excluded from the system.
Automatic withholding tax mechanism will not be launched before 2028. At that time, banks and other service providers will pay taxes directly, just as other capital income is treated. This delay period provides the platform with one year to build relevant systems. If the user can provide the purchase price and acquisition date when transferring assets between platforms, the service provider can calculate the tax based on this; if the customer cannot provide this information, a fixed tax rate will apply.
The bill argues that the development of cryptocurrencies has exceeded its current tax treatment. The draft states that crypto assets are "increasingly becoming a form of private capital investment" and that the reform aims to end their special status as other economic goods, such as classic cars or art. The Ministry of Finance said more bluntly: "It would be unfair if income from hard work and capital gains are taxed, while profits obtained through speculation in crypto assets are basically exempt."
The fiscal revenue from this reform is expected to be limited: 160 million euros in 2028 and increase to 350 million euros annually by 2031. The draft is still in the early stage of coordination within the federal government, and its content may change. However, during summer budget negotiations between the Social Democrats and the Alliance, the two sides reached a consensus on a cryptocurrency tax.
