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Germany's Finance Ministry has drafted legislation imposing a flat 25% tax on crypto tax gains from 2028, and the part that will actually change behavior is the repeal: the draft ends the rule that made crypto held longer than 12 months 100% tax-free. Assets acquired after Jan. 1, 2027 fall under the capital income tax, the Abgeltungsteuer, with full effect in 2028. The €1,000 annual private disposal allowance survives. The ministry pegs the measure at roughly €350 million ($385 million) a year, inside a €2 billion ($2.2 billion) enforcement package tied to the 2027 budget that Finance Minister Lars Klingbeil presented Tuesday, alongside €550 billion in spending and €120 billion in new borrowing.
The rebalancing cuts both ways, which most coverage misses. Under current rules, crypto sold within 12 months is taxed at personal income rates up to 45%, while anything held past a year was free. The new 25% flat rate kills the long-term exemption but drops the ceiling for short-term traders from 45% to 25%. Active traders get a tax cut. HODLers lose their entire advantage. Der Spiegel, citing ministry sources, called the old asymmetry "unfair" for taxing earned income while leaving speculative crypto gains untouched, and Klingbeil had already signaled in April that the government intended to "tax cryptocurrencies differently."
The Numbers Explain the Timing
Chainalysis estimated Germany generated $24.1 billion in potentially taxable on-chain activity during 2025: $15.6 billion in payments, $6.1 billion in realized gains, and $2.4 billion in income. Against a base like that, €350 million is a modest revenue claim, which suggests the draft is aimed less at collection than at normalization: crypto gains now sit in the same bucket as equity dividends and bond interest, offsettable against losses from traditional securities, with a Günstigerprüfung option letting taxpayers below the 25% bracket apply their lower personal rate. It is the tax code formally declaring crypto a capital asset rather than a curiosity. The context is Germany's lead position in Europe's MiCA regime, with 79 authorized crypto asset service providers as of August, versus 35 in France and 29 in the Netherlands, a regulatory depth the ministry clearly intends to monetize.
Two honest warnings. First, this is a draft: it faces inter-ministerial review, cabinet approval, and Bundestag and Bundesrat votes, and a Green Party proposal to remove the 12-month exemption was defeated in May, with CDU/CSU opposition on record and the AfD polling near 44% in Saxony-Anhalt. Grandfathering for assets acquired before 2027 is unsettled in the draft text, a hole that matters enormously to current holders. Second, the end of the holding exemption is a rare tax rise that changes portfolio strategy for ordinary savers, not just traders: the rational response is a wave of pre-2027 accumulation and then, perhaps, structuring through institutional wrappers.
Watch the Bundesrat vote and any grandfathering amendment. If pre-2027 coins keep their exemption, Germany's long-term holders just became the luckiest tax refugees in Europe. If not, expect one very large taxable year in 2027.
