The German Federal Ministry of Finance has drafted a proposal to introduce a 25% flat-rate tax on cryptocurrency trading profits. If implemented, this policy would mark a significant shift from the current legislation, which currently allows investors to sell crypto assets tax-free after holding them for more than 12 months.
According to the draft document, the new tax regime would apply to all digital assets acquired on or after January 1, 2027. Assets purchased before this date would remain subject to existing tax rules under a grandfathering clause, protecting long-term holders from the immediate impact of the proposed changes.
Finance Minister Lars Klingbeil initially announced the government's intention to reform crypto taxation in late April. The ministry estimates that the new tax measures could generate approximately €2 billion, which is equivalent to about $2.3 billion, in additional annual budget revenue for the country.
The proposal aims to align the taxation of cryptocurrency gains with the standard flat-rate tax applied to other capital investments in Germany. The ministry has not yet provided further details on the legislative process, and the proposed changes are currently scheduled to take effect starting in 2028.
