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BTC 
ETH Germany plans to impose a flat tax rate of 25% on cryptocurrency gains
The German Federal Ministry of Finance has drafted relevant legislation to impose a flat tax rate of 25% on cryptocurrency gains. The move will revolutionize one of Europe's most investor-friendly crypto tax regimes. According to Der Spiegel and confirmed by multiple media on September 9, 2026, the proposal will cover Bitcoin (BTC), Ethereum (ETH) and other altcoin positions.
According to the draft regulations, cryptocurrency gains will be reclassified as capital income under the German "capital gains tax"(Abgeltungsteuer) framework, putting them on the same footing as stocks and funds. A 25% tax rate applies regardless of the length of time investors hold assets. This would directly eliminate the current "one-year holding period tax exemption" policy, which previously made Germany a popular destination for long-term cryptocurrency holders.
The draft was announced in mid-August 2026 and will officially take effect on January 1, 2027, and will apply to assets purchased thereafter. Exchanges and brokers will begin implementing an automatic tax withholding mechanism, which is scheduled to begin a year later, January 1, 2028, giving service providers enough time to establish the required compliance infrastructure. Existing positions held before this deadline will still enjoy the current one-year tax exemption.
Budget pressures and legislative prospects
Social Democratic Party (SPD) Finance Minister Lars Klingbeil is pushing the measure as part of a broader effort to fill a huge gap in the 2027 federal budget. The Ministry of Finance predicts that in the first year of automatic withholding taxes, the cryptocurrency tax will generate approximately 160 million euros in additional revenue, and annual revenue is expected to increase to approximately 350 million euros by 2031.
However, the proposal has not yet become law. As Cryptoticker points out, the current document is only a point sheet and a statement of political intent rather than a binding legal tool. Before it can take effect, the bill must go through a full review process by the Bundestag and the Bundesrat and be promulgated in the Federal Law Gazette.
This is not the first time the Social Democratic Party has promoted this change. The party made a similar proposal in the joint cabinet formation negotiations in 2025, but was blocked by the CDU/CSU, and the measure was eventually excluded from the May 2025 coalition agreement. The latest push is embedded in a broader budget package that analysts describe as the fourth attempt to eliminate tax exemptions in the past 18 months.
One noteworthy plus for investors is that once cryptocurrencies are included in the capital income system, losses generated by cryptocurrencies can be used to offset losses on stocks and other securities. This flexibility is not currently available under existing private asset classifications.
