Germany Proposes 25% Crypto Tax Starting 2028, Ending Tax-Free Holding Period

Germany's Finance Ministry is seeking to impose a flat 25% tax on cryptocurrency gains from 2028, abandoning the current rule that exempts holders after one year.

Germany's Ministry of Finance has reportedly drafted legislation to introduce a 25% flat tax on cryptocurrency gains beginning in 2028, marking a fundamental shift from the country's current crypto-friendly tax regime. Under existing law, German investors can sell digital assets tax-free if they have held them for at least one year, a provision that has made the country an attractive destination for long-term crypto holders.

The proposed change would eliminate the holding-period exemption entirely and subject all cryptocurrency gains to the same 25% capital gains tax applied to traditional securities and savings income. The measure is part of a broader push by German tax authorities to align digital asset treatment with conventional financial instruments and close what regulators view as a tax loophole.

If enacted, the new tax would apply to Bitcoin, Ethereum, stablecoins and all other digital assets recognized as property under German law. Gains from mining, staking and decentralized finance activities would also fall under the new regime, according to early reports, though detailed guidance on these activities has not yet been published.

The proposal comes as Germany grapples with budget pressures and rising public debt following years of fiscal stimulus and energy subsidy programs. Finance officials have indicated that closing gaps in crypto taxation could generate hundreds of millions of euros in annual revenue, though precise estimates have not been disclosed.

Germany's crypto industry has voiced strong opposition, warning that the measure could drive investors and blockchain startups to more favorable jurisdictions such as Switzerland, Portugal or the United Arab Emirates. Industry groups argue that taxing unrealized or short-term gains at the same rate as dividend income ignores the unique risks and volatility of digital assets.

The draft legislation is expected to undergo parliamentary review in early 2027, with a final vote likely by mid-year. If approved, the law would take effect on January 1, 2028, giving investors more than a year to adjust their portfolios. Tax advisers are already counseling clients to consider realizing gains before the deadline or relocating to jurisdictions with more favorable treatment.

The move reflects a broader European trend toward stricter crypto regulation and taxation. France and Italy have already introduced or raised crypto taxes in recent years, while the EU's Markets in Crypto-Assets (MiCA) framework, which took full effect in 2026, has increased compliance costs and reporting requirements across the bloc. Germany's proposal, if enacted, would represent one of the most aggressive tax regimes in the region and could set a precedent for other member states.