Foreign media: A draft tax reform circulated from the German Ministry of Finance proposes to abolish the tax exemption for holding crypto assets for a full year and to incorporate related earnings into the unified capital gains tax system. The article argues that this adjustment is not merely about "increasing taxes," but rather about leveling the tax differences between long-term holdings and short-term trading.
Newly acquired assets after 2027 will be subject to the new regulations.
According to the draft, December 31, 2026, will be the cut-off date. Cryptocurrency assets purchased on or after January 1, 2027, will be subject to the new capital gains tax rules; assets purchased prior to that date will, in principle, continue to be governed by the current regulations.
The new tax rate is nominally 25%, and after adding the solidarity surcharge, the actual tax rate becomes 26.375%. The church tax is calculated separately. The article mentions that this is also the reason why some reports refer to 2027 and others to 2028: the former refers to the time when the law takes effect, while the latter is related to the start time of the platform's withholding and payment process.
Long-term holders face increased tax burdens, while active traders may benefit.
Under the current rules in Germany, individuals who hold crypto assets for more than one year before selling them are generally not required to pay taxes on the profits; however, if sold within one year, taxes are levied according to the individual income tax rate, which can be as high as 45%.
Once the draft is implemented, this distinction will be eliminated. For long-term holders, the most attractive tax exemption arrangements will no longer apply to assets purchased after 2027. For short-term traders in the higher tax rate brackets, the tax rate may be reduced from a maximum of 45% to 26.375%.
The article also mentions that income from staking and crypto lending is proposed to be reclassified as capital income, to be included in the same tax regime. At the same time, investors can use a tax exemption of 1,000 euros for their savings, and crypto losses can be offset against securities investment gains, which is a relaxation compared to current regulations.
Platform withholding will start in 2028, and cost justification will become crucial.
The draft proposes that encryption service providers will begin automatically deducting relevant taxes starting from January 1, 2028, reserving one year for the platforms to transform their systems.
The article argues that a change that is more easily overlooked lies in cost verification. If investors transfer assets from self-managed wallets or other platforms to service providers' accounts but are unable to provide the purchase price and date of acquisition, the platform may directly apply a base tax rate of 25% to the total amount sold, without deducting the original cost. This means that assets purchased in earlier years and later transferred back to the platform may face a higher actual tax burden.
The scale of fiscal revenue increase is limited, but the probability of it being higher than in previous instances is greater.
The article states that the German government expects this adjustment to generate an additional tax revenue of about 160 million euros in 2028 and about 350 million euros in annual revenue by 2031. Compared to the size of Germany's federal budget, this figure is not large; therefore, the outside world tends to interpret this reform as a unification of the tax system rather than merely an increase in revenue.
The article also mentions that this is the fourth attempt in about 18 months for Germany to repeal the one-year tax exemption rule. Previous attempts were not successful, but the difference this time is that the relevant provisions have been included in the budget bill, making it more difficult to delete them separately.
If the draft progresses in its current direction, Germany's long-standing relatively lenient tax environment for long-term holders of cryptocurrencies may see significant changes after 2027.
