Germany's Federal Ministry of Finance has drafted a bill imposing a 25% flat withholding tax on crypto gains, but only for assets bought after December 31, 2026. Holdings acquired before that date keep the current one-year tax-free exemption, creating a two-tier system as the draft law heads to parliament.
Germany's Federal Ministry of Finance has drafted a bill that would apply a 25% flat withholding tax to crypto gains, but only for assets purchased after December 31, 2026. Everything bought before that date stays under the old rules.
New purchases face capital-income treatment
Crypto acquired after the cutoff would be reclassified as capital income under §20 of Germany's Income Tax Act, subject to the standard 25% withholding rate plus the solidarity surcharge, for a combined effective rate of roughly 26.375%. That mirrors the tax treatment Germany already applies to stock dividends and bond interest. The bill also lets crypto losses offset gains from shares and other securities, keeps a saver's allowance of €1,000 per person, and applies a "favorability check" for anyone whose marginal tax rate falls below 25%.
Existing holdings keep their exemption
Assets acquired on or before December 31, 2026 continue under the existing §23 framework: hold Bitcoin or Ether for at least 12 months and gains stay tax-free, provided they remain under the annual exemption limit of €1,000. It's the first time Germany has set an explicit grandfathering date for crypto tax, drawing a bright line between old and new holdings.
Timeline and revenue projections
The draft law, unveiled in mid-August 2026, would take effect January 1, 2027, with automatic withholding by service providers starting a year later on January 1, 2028. Finance Minister Lars Klingbeil of the SPD is championing the bill as part of Germany's broader budget consolidation push. The government projects about €160 million in additional federal revenue in 2028, rising to around €350 million annually by 2031. The draft still needs approval from both the Bundestag and the Bundesrat.
The grandfathering clause gives investors an incentive to accumulate crypto before the cutoff, locking in the more favorable tax treatment permanently for those holdings. Meanwhile, the year-long gap between the law's effective date and the start of automatic withholding gives exchanges and brokers time to build compliance infrastructure.
Source: Crypto Briefing
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