Germany Wants To End Bitcoin's Tax-Free Perk. Long-Term Holders Could Soon Face A 26% Tax.

Germany is preparing to end a major tax advantage for cryptocurrency investors, with a Finance Ministry proposal that would make gains on newly purchased Bitcoin and other digital assets taxable even when they are held for more than a year.

Under the proposal, crypto acquired after Dec. 31, 2026, would fall under Germany's flat tax on investment income, known as the Abgeltungsteuer. Assets bought before the cutoff would remain under the existing rules, which generally allow private investors to sell cryptocurrency without paying tax once the one-year holding period has passed.

The planned change was first reported by German newspaper Die Welt and based on a draft from the Federal Ministry of Finance. The proposal is still moving through the government process and could be changed before becoming law.

Germany currently treats Bitcoin, Ether and similar privately held crypto assets differently from stocks for income-tax purposes. Finance Ministry guidance classifies a sale within one year of acquisition as a private sale transaction, while a sale after the applicable holding period can be tax-free.

The new system would remove that holding-period exemption for assets purchased after the cutoff and instead treat gains as investment income. Germany's tax rate on most capital income is 25%, with a 5.5% solidarity surcharge imposed on the tax itself, bringing the effective rate to 26.375% before any applicable church tax. The Finance Ministry's tax guidance confirms the 25% rate for capital income.