Germany Moves to End Tax-Free Crypto Gains With 25% Flat Tax

Key Takeaways

• Germany's government is moving toward abolishing the country's tax exemption for crypto sold after more than one year.

• The preferred government model would reportedly treat crypto as investment income, subjecting gains to a flat 25% tax plus Germany's solidarity surcharge.

• The proposal remains under development and has not yet become law, meaning Germany's existing one-year exemption remains in force.

Germany is moving to eliminate one of Europe's most attractive tax benefits for long-term crypto investors, potentially replacing tax-free gains on Bitcoin with a flat 25% levy.

Under existing German rules, private investors generally pay no tax when they sell crypto assets, including Bitcoin.

Gains realized within one year are taxed at the investor's individual income tax rate, subject to a €1,000 annual exemption.

But the government is working toward ending that distinction.

A cabinet position adopted in July points toward moving crypto gains into Germany's investment-income regime, according to analysis of the proposal. That would subject gains to the country's 25% flat capital gains tax, regardless of how long the cryptocurrency was held.

Once Germany's 5.5% solidarity surcharge on the tax itself is included, the effective rate would rise to approximately 26.375%, excluding any applicable church tax.