Germany Crypto Tax 2028: The 25% Flat Tax That Ends Tax-Free Bitcoin — Complete Investor Guide

Germany is about to end the tax rule that made it the most crypto-friendly major economy in Europe. The Federal Ministry of Finance has published a draft bill that would scrap the famous one-year tax-free holding period for Bitcoin and other cryptocurrencies, replacing it with a flat 25% capital-gains tax from 2028. And the political timeline just accelerated: on October 8, 2026, the Bundestag voted on three separate crypto tax measures in a single day — rejecting one attempt to kill the holding period while passing a law that lets German tax authorities automatically receive crypto transaction data from countries outside the EU. If you hold Bitcoin in Germany, what happens next depends almost entirely on a single date: December 31, 2026.

This guide breaks down exactly what the draft bill contains, how the 25% flat tax would work in practice, the full timeline through 2028, what the Bundestag's October votes actually changed, and the concrete steps German crypto investors should take before the end of 2026. For context on how other countries are handling the same question, see our South Korea crypto tax 2027 guide and our France crypto tax 2027 guide.

Germany's Tax-Free Bitcoin Rule: How It Worked and Why It Mattered

Since a 2022 position by the Finance Ministry, Germany has treated cryptocurrencies held as private assets under Section 23 of the Income Tax Act (Einkommensteuergesetz), similar to gold or real estate. The result was simple and powerful: sell Bitcoin, Ether or other crypto after holding it for more than twelve months, and the gain was completely tax-free. Gains on sales within the first year were taxed at the holder's personal income tax rate, which can reach up to 45% plus the solidarity surcharge.

The rule was later extended to coins earned through staking and lending, which became a major reason Germany attracted long-term crypto capital. No other G7 country offered anything comparable: long-term holders parked coins there, crypto businesses set up shop, and fund managers in Frankfurt built products around a tax treatment that existed nowhere else among major economies. As Startup Fortune's analysis notes, this single exemption is a large part of the reason Germany became Europe's favorite place to hold Bitcoin.

The institutional side of German crypto has been booming alongside it. As we reported in our Germany MiCA banking guide, 65 banks including Deutsche Bank now offer crypto services under the EU's MiCA framework, and Sparkasse's in-app crypto trading opened Bitcoin buying to 50 million customers. The proposed tax overhaul lands directly on top of this mainstreaming wave.

The 25% Flat Tax Draft: What the Finance Ministry Actually Proposes

On September 30, 2026, the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) published the draft bill (Referentenentwurf) on the reform of crypto-asset taxation, prepared under Vice Chancellor and Finance Minister Lars Klingbeil. According to the detailed legal analysis by A&O Shearman, three changes are decisive for private investors:

First, the one-year holding period would be abolished. Capital gains on crypto would become taxable regardless of how long the assets have been held. The twelve-month rule that made Germany unique would simply disappear.

Second, crypto gains would be reclassified as investment income. Instead of being taxed as "other income" under Section 22 of the Income Tax Act, income from the disposal of so-called exchange crypto-assets (Tauschkryptowerte, such as Bitcoin and Ether) would qualify as investment income under Section 20 ITA — the same category as stock gains and dividends. That reclassification carries the flat tax rate with it: 25% plus the 5.5% solidarity surcharge, for an effective rate of 26.375% before any church tax. For high earners who currently face up to 45% on short-term crypto gains, this is actually a cut; for long-term holders who currently pay 0%, it is a brand-new tax.

Third, platforms would withhold the tax automatically. Domestic crypto-asset service providers would be obliged to apply withholding tax on investment income (Kapitalertragsteuer) starting January 1, 2028 — exactly the way German brokerages already withhold tax on stock sales. Investors would no longer need to self-declare gains made through regulated platforms; the tax would be deducted at source.

Two investor-friendly details survive the overhaul. A €1,000 personal allowance (Sparer-Pauschbetrag threshold applied to private disposals) is expected to remain, giving small traders breathing room. And because crypto would sit inside the capital-income system, crypto gains and losses could be offset against gains and losses from stocks and other securities — a netting option that does not exist under the current regime. As Crypto.News reports, the Finance Ministry expects the measure to generate roughly €160 million in additional revenue in 2028, rising to about €350 million annually by 2031.

The Full Timeline: From Draft Bill to 2028 Withholding

The proposal is not law yet, and its path runs through several more gates. Here is the timeline that matters:

• End of April 2026: Vice Chancellor Klingbeil first discloses plans to change Germany's crypto tax treatment.
• September 9, 2026: The Finance Ministry circulates the draft bill among federal ministries for interdepartmental review.
• September 30, 2026: The BMF formally publishes the Referentenentwurf; industry consultation begins.
• October 6, 2026: Deadline for written feedback from industry bodies.
• October 8, 2026: The Bundestag rejects the Greens' separate bill to abolish the holding period (445 votes against, 132 in favor) — but on the same day passes the CARF treaty act enabling automatic crypto data exchange with non-EU states.
• October 12, 2026: The Bundestag's petitions committee debates the holding period in public, with government representatives required to answer on the record.
• October 14, 2026: The federal cabinet takes up the BMF draft bill.
• Later: Bundestag and Bundesrat readings and votes, if the cabinet approves the draft.
• January 1, 2027: New rules would apply to crypto acquired from this date — new holdings become taxable regardless of holding period.
• January 1, 2028: Automatic withholding by domestic crypto platforms begins.

The October 8 vote deserves a closer look, because headlines about it have confused many investors. The Bundestag did not vote on the BMF draft that day — it voted on a different bill, tabled by the Greens, that would also have abolished the holding period. As CoinStats' detailed vote breakdown explains, the Greens' bill failed decisively, which means the existing one-year rule continues to apply for now. The measure that actually decides the holding period's future — the BMF draft — had not yet reached parliament. So the October 8 rejection changed nothing in the short term, but it should not be read as the holding period being "saved": the government's own, much more powerful draft is the one to watch. On the same morning, the Bundestag also rejected a Left-party motion seeking to tax crypto gains as investment income while adding EU-level trading restrictions, per TokenPost.

Grandfathering: Why December 31, 2026 Is the Decisive Date

The draft's most important practical feature is its transition rule. The new regime would apply only to exchange crypto-assets acquired or received after December 31, 2026 — the "New Holdings". Crypto acquired before that date — "Legacy Holdings" — would remain under the existing rules, meaning the twelve-month holding period could still make their gains tax-free even when sold years later.

This creates a clearly defined planning window. An investor who buys Bitcoin in November 2026 and holds it until November 2027 would sell tax-free under the legacy rules. An investor who buys the same Bitcoin in January 2027 would face the 25% flat tax on any gain, whenever it is sold. As Grafa's coverage emphasizes, the 2026 acquisition cutoff — not the 2028 withholding start — is the operative date for planning.

The rule also extends to coins received through staking and lending: what matters is the acquisition date of the asset. Investors should therefore document acquisition dates carefully now, because without proof of acquisition costs, tax authorities may apply substitute assessments under the new reporting regime.

CARF Passes: Your Offshore Exchange Account Is No Longer Invisible

The second major development on October 8 received less attention but may matter just as much. Late that evening, the Bundestag passed the treaty act implementing the Crypto-Asset Reporting Framework (CARF) — the OECD's international agreement on automatic exchange of crypto transaction data. As CoinStats reports, German tax authorities will now be able to exchange data on crypto transactions with countries outside the European Union as well, once the partner state delivers in return.

The practical consequence is blunt: a crypto account held at an exchange in Singapore, the Cayman Islands, or Switzerland no longer sits beyond the reach of the German tax office. The framework does not change anyone's tax liability — it changes the probability that the tax office can cross-check what you declare. The Bundestag's own justification for the measure was "to effectively combat cross-border tax evasion," and the vote was broad: CDU/CSU, SPD, Greens and the Left voted in favor, with only the AfD against.

Combined with the 2028 withholding regime, CARF closes the two main compliance gaps at once: domestic platforms will report and withhold automatically, and foreign platform data will flow in through the exchange framework. For background on the global compliance trend, see our crypto taxes 2026 complete guide, which covers the parallel US 1099-DA reporting rollout.

What About Staking, Lending and Stablecoins?

The draft focuses on exchange crypto-assets (Tauschkryptowerte) — Bitcoin, Ether and comparable tokens. According to CoinGabbar's summary of the draft, staking and lending income would also count as capital income under the new regime, folding yield earnings into the same 25% framework rather than the old personal-income treatment.

Stablecoins and crypto-to-crypto swaps remain areas where investors should watch the final text closely. Under the current system, swapping Bitcoin for a stablecoin is a taxable disposal event if done within the holding period; under the new regime it would simply be a capital-income event like selling a stock. The reclassification removes the holding-period puzzle entirely — at the cost of making every profitable disposal taxable. This mirrors the direction other European countries are taking: France, for instance, is moving to tax crypto-to-stablecoin swaps at 31.4% from 2027, as we detailed in our France crypto tax guide.

What German Crypto Investors Should Do Before December 31, 2026

The draft is not final law, and nothing here is tax advice — consult a German tax adviser (Steuerberater) for your situation. But the structure of the proposal points to several concrete steps worth considering now:

Document every acquisition date and cost basis. The legacy/new-holding distinction turns entirely on when you acquired each asset. Exchange statements, on-chain records and wallet exports should be archived now, because the substitute-assessment risk falls on investors who cannot prove their costs.

Decide on planned purchases before year-end. Coins bought before January 1, 2027 fall under the legacy regime. This does not mean rushing into oversized positions — Bitcoin remains volatile, as our Bitcoin ETF comparison coverage of 2026's flows shows — but the timing of planned long-term allocations matters more than it ever has.

Review staking and lending setups. Rewards earned and assets deployed across protocols acquire their own acquisition dates; consolidate records across every venue, including foreign exchanges, because CARF reporting will make those balances visible to the tax office.

Model the rate change honestly. If you are a long-term holder, the change from 0% to 26.375% is the largest tax increase German crypto investors have ever faced. If you are a short-term trader paying up to 45% today, the flat 25% rate plus loss-offsetting against stock gains may actually improve your position. Run both scenarios.

Secure your holdings. Regulatory transitions are prime phishing season — fake "tax office" emails and bogus "withholding registration" sites will target German crypto users. Our crypto security guide covers the current threat landscape, and if you are moving assets between platforms, our exchange comparison can help you pick a compliant venue.

Why Germany Is Doing This Now

Three forces are converging. First, revenue: the Finance Ministry projects hundreds of millions in annual receipts, money a coalition government under budget pressure will not leave on the table. Second, fairness politics: taxing a factory worker's wages at up to 45% while a Bitcoin millionaire pays nothing has become politically indefensible, and the debate has moved from the Greens' opposition benches into the Finance Ministry itself. Third, international coordination: with CARF and the EU's DAC8 directive standardizing crypto reporting across borders, the argument that Germany must keep a uniquely generous regime to stay competitive is weakening — every jurisdiction will soon see the same data.

There is also a defensive logic. Germany's exemption was designed in an era when crypto was a niche retail phenomenon. In 2026, with 65 MiCA-licensed banks, Sparkasse's 50 million customers, and automatic reporting on the way, crypto in Germany is a mainstream asset class — and mainstream asset classes get mainstream tax treatment. The draft effectively says: crypto has grown up, so it gets taxed like everything else.

What Could Still Change

The draft remains a Referentenentwurf — the earliest formal stage of German legislation. Industry feedback was due October 6, the cabinet discussed it October 14, and it still needs cabinet approval, Bundestag readings, and Bundesrat consent before becoming law. Each stage is a chance for amendments: the €1,000 allowance could move, the staking treatment could be refined, and the transition rules could shift. The broad parliamentary majority that rejected the Greens' bill on October 8 shows that the holding period still has defenders across the political spectrum — CDU/CSU, SPD, Greens and the Left all voted against abolishing it that day, even though the government's own draft would achieve a similar result through a different route.

Investors should therefore treat the current draft as the base case, not the final word, and follow the cabinet and Bundestag votes as they happen. We will update this story as the legislation moves.

FAQs

Will Germany tax my Bitcoin at 25% if I bought it years ago?

No — under the draft bill, crypto acquired before January 1, 2027 keeps the existing rules. If you bought Bitcoin in, say, 2024 and sell it after holding it for more than twelve months, the gain remains tax-free. The new 25% flat tax would apply only to crypto acquired from January 1, 2027 onward. The draft is not yet law, so the final grandfathering rules could still change.

What is the exact tax rate — 25% or 26.375%?

The draft sets the flat capital-income tax at 25%. Adding Germany's 5.5% solidarity surcharge on the tax gives an effective rate of 26.375%, before any church tax that may apply. This is the same Abgeltungsteuer rate already applied to stock gains and dividends.

Does the one-year holding period still exist in 2026?

Yes. On October 8, 2026, the Bundestag rejected the Greens' bill to abolish the holding period by 445 votes to 132, so the current rule — tax-free sales after twelve months — continues to apply. The Finance Ministry's own draft bill, which would end the exemption, had not yet reached parliament at that point.

When would platforms start withholding the tax automatically?

From January 1, 2028, under the draft. Domestic crypto-asset service providers would be obliged to withhold the flat tax on investment income at source, the same way German brokerages already withhold tax on stock sales.

Can I offset crypto losses against stock gains under the new rules?

Yes — this is one of the few improvements in the draft. Because crypto gains would be reclassified as capital income under Section 20 of the Income Tax Act, crypto losses could be offset against gains from stocks and other securities, which is not possible under the current regime.

Will the German tax office see my crypto on foreign exchanges?

Increasingly, yes. The Bundestag passed the CARF treaty act on October 8, 2026, enabling automatic exchange of crypto transaction data with non-EU countries. Combined with the EU's DAC8 reporting and the 2028 domestic withholding regime, foreign exchange balances in participating countries will become visible to German tax authorities.

Conclusion

Germany's 25% flat crypto tax is the most consequential change to European crypto taxation in years. The draft bill would end the one-year tax-free holding period that made Germany a magnet for long-term Bitcoin capital, replace it with a 26.375% effective rate withheld at source from 2028, and — via the CARF framework the Bundestag has already passed — make offshore crypto balances visible to the tax office. The decisive date is December 31, 2026: crypto acquired before then keeps the old rules; crypto acquired after falls under the new regime.

The legislation is not final, and the political path through cabinet, Bundestag and Bundesrat leaves room for changes. But the direction is unmistakable: Germany is treating crypto as a mainstream asset class, with mainstream taxation to match. German investors who act before year-end — documenting acquisition dates, timing planned purchases, and modeling the new rate — will face 2027 and 2028 from a position of strength. Everyone else will be learning the new rules the expensive way.