Germany Plans to End Tax‑Free Bitcoin Holding Rule from 2027

Germany’s finance ministry has drafted legislation that would end the country’s long‑standing tax exemption for Bitcoin held longer than one year. Under the proposal, any Bitcoin bought after 31 December 2026 would be subject to a flat 25% withholding tax on gains, plus a solidarity surcharge.

Current rule and proposed change

Today, German tax law exempts profits from Bitcoin sold after a 12‑month holding period, while sales within a year are taxed as income at rates up to 42%. The draft law would remove the exemption entirely, applying the 25% rate – the same rate used for shares and dividends – to all future Bitcoin sales.

Impact on investors

• Purchases made before 31 December 2026 would continue to follow the existing exemption rules.
• Purchases made after that date would incur the 25% tax on any profit, regardless of holding period.
• The first €1,000 of annual gains would remain tax‑free, and losses could be offset against other gains.
• High‑frequency traders could see their effective tax rate drop from up to 42% to roughly 26%.
• Long‑term holders would move from a 0% rate to roughly 26%.

Revenue expectations and legislative outlook

The ministry estimates the new rule could generate €160 million in 2028, rising to €350 million by 2031. The proposal still requires approval by the cabinet, the Bundestag and the Bundesrat. A similar attempt was rejected in May, and the draft is expected to be linked to broader crypto‑tax reporting measures that would require exchanges to withhold taxes from 2028.