Germany's 25 percent crypto tax is a tax cut for anyone who trades

Germany's finance ministry has drafted a bill taxing crypto gains at a flat 25 percent regardless of holding period, effective January 1, 2027, and only on assets bought from that date. Welt reported it first on September 8, from a departmental draft dated mid-August. Handelsblatt has since seen the document.

Read the coverage and you get one story. Germany ends its famous twelve-month exemption, long-term holders lose out, critics grumble. All true, and it skips the number that matters.

Today a German who sells inside twelve months pays ordinary income tax, up to 42 percent for higher earners. Under the draft they pay 25 percent plus a solidarity surcharge worth 5.5 percent of the tax, which comes to 26.375 percent before church tax.

For an active trader in the top bracket, that is a cut of more than fifteen points.

Did anyone say so? Not in the English coverage we read.

So the bill described everywhere as Germany taxing crypto is, for the people who trade crypto most, the largest reduction in their tax bill in years. It is a rise only for the people who buy and wait, and only for coins they buy after New Year 2027. Anything already in a German wallet keeps the old rules, exemption included.

That grandfathering deserves a moment. From 2027, Germany will have two crypto stocks sitting side by side — an old one that can be sold tax-free after a year, and a new one taxed at 26.375 percent forever.

If you held both, which would you sell?

The old one, obviously, every time, until the tax-free stock is gone. Which probably means the revenue line arrives later and smaller than a straight-line model would suggest.

The ministry's own numbers are already modest. It expects 160 million euros in 2028, rising to 350 million by 2030 on Handelsblatt's account of the draft, though Decrypt's version of the same document puts the 350 million figure at 2031. At an effective 26.375 percent, 350 million euros of tax implies roughly 1.3 billion euros of realised gains a year across a country of 84 million people (divide and see). Germany is rebuilding the tax treatment of an entire asset class to reach into a pot that size.

The justification in the draft is straightforward and, on its own terms, fair. "Kryptowerte stellen zunehmend eine Form der privaten Kapitalanlage dar," it says — crypto assets increasingly represent a form of private capital investment — and the change ends their special status against other capital income such as share dealing. A ministry line put it harder. "Es ist ungerecht, wenn hart erarbeitete Einkommen und Kapitalerträge besteuert werden, Gewinne aus Spekulationen mit Kryptowerten aber weitgehend steuerfrei bleiben." Unfair, in other words, that hard-earned income is taxed while speculative crypto profits largely are not.

BTC-ECHO asked the ministry directly and got a confirmation that the work is real, with the details still open. "Kern der Neuregelung soll sein, dass Gewinne aus der Veräußerung von Kryptowerten gleich behandelt werden mit Gewinnen aus der Veräußerung von Wertpapieren wie Aktien," a spokesperson said — the core is equal treatment with securities. On whether the rule applies only to assets bought after January 1, 2027, the ministry declined to say, citing coordination inside the government. Which happens to be the one question every German holder is asking.

The rest of the design is unremarkable and, in places, generous. The 1,000-euro saver's allowance applies. Losses offset gains, including gains on shares (a genuine improvement on the current mess). Staking and lending income becomes capital income. NFTs, security tokens, some stablecoins and some real-world-asset tokens stay outside the regime. Withholding by banks and platforms does not start until 2028 (platforms get a year to build the systems), and where a customer cannot produce a purchase price and acquisition date, the flat rate applies regardless.

Our read is that this probably passes in something close to this shape, because the Union and SPD already agreed to tax crypto during summer budget talks and because a 25 percent flat rate is likely the least painful version available to them. We would expect German exchange volumes to spike in the fourth quarter of 2026 as buyers rush to get inside the grandfather window, and we would expect the ministry to miss its 2028 revenue estimate on the low side. A final bill that taxes existing holdings too would break both of those calls, and would also be a political fight of a completely different size.