Germany Proposes 25% Tax on Cryptocurrency Gains, Ending One-Year Exemption
- Germany’s Finance Ministry is drafting a proposal to tax cryptocurrency gains at a flat rate of 25%.
- The new tax would apply to all investors, regardless of how long they held their assets before selling.
- Currently, profits from crypto held for over one year are not taxed, while shorter holding periods can incur personal income tax rates up to 45%.
- The government estimates the new rules could generate an additional €160 million in revenue by 2028, potentially rising to €350 million by 2031.
- The proposed changes will require cabinet approval and parliamentary review before becoming law.
This proposal aims to align the taxation of cryptocurrency with other investment incomes and address perceived inequities in the current system. The introduction of automatic withholding for exchanges starting in 2028 is also part of the plan.
If implemented, the new tax structure would significantly impact long-term investors who previously enjoyed a one-year exemption while potentially benefiting some short-term traders with lower rates than before.
