Germany’s Finance Ministry has drafted legislation that would remove a long-standing tax advantage for private crypto investors. Under the proposal, gains on bitcoin and other cryptocurrencies bought after Dec. 31, 2026 would become taxable regardless of how long the assets are held.

The change would leave existing holdings under current rules, but new purchases would move into a framework closer to the one used for shares and other capital investments. The draft also sets out how staking, lending and tax withholding would be handled if the measure becomes law.

What the draft bill would change

At present, private investors in Germany can sell bitcoin and other cryptocurrencies tax-free if they have held them for more than 12 months. The Finance Ministry’s draft would end that treatment for crypto acquired from Jan. 1, 2027 onward, meaning future gains would be taxed even after a long holding period.

Bitcoin and ether would be brought under Germany’s Abgeltungsteuer system, which applies a 25% capital gains tax plus a 5.5% solidarity surcharge, for an effective rate of 26.375%. The proposal would also treat income from crypto lending and staking as capital income.

Assets inside and outside the new regime

The draft does not apply the same treatment to every digital asset. While bitcoin and ether would be included in the capital gains tax regime, NFTs, some stablecoins, security tokens and certain tokens backed by real-world assets would remain outside it.

That carveout means the proposal is not a blanket rewrite for all crypto-related instruments. Instead, it creates a more defined separation between major cryptocurrencies and several other token categories.

Transition rules and tax collection

A key feature of the proposal is its transition treatment. Crypto already held before the cutoff would keep the current tax rules, so the end of the 12-month exemption would apply only to assets acquired after Dec. 31, 2026.

The law is scheduled to take effect in January 2027 if adopted. Crypto service providers would then be required to begin automatic tax withholding in 2028. If an investor cannot document the purchase price and acquisition date of an asset, a 25% flat tax would apply.

Who could be affected and what comes next

The Finance Ministry expects the measure to raise about €160 million in additional tax revenue in 2028, with annual revenue projected to increase to roughly €350 million by 2031. The draft suggests the government sees the change as both a tax policy adjustment and a way to standardize how crypto gains are collected.

The proposal could reduce the benefit for long-term holders who currently rely on the one-year tax-free rule. At the same time, short-term traders could in some cases face a lower burden than under personal income tax, because gains would instead be taxed at a flat rate. The next confirmed step is the planned start date in January 2027, followed by provider withholding in 2028, if the bill passes in its current form.

Source: www.coindesk.com