Germany Plans to Impose 25% Tax on Long-Term Cryptocurrency Profits

The German federal government plans to adjust its cryptocurrency tax policy, proposing a 25% tax on capital gains from the sale of assets held for more than one year. The proposal has been published in a draft project by the Ministry of Finance and will apply to purchases made from January 1, 2027. Currently, cryptocurrency assets can be sold tax-free after being held for a year, but if the new policy is approved, this tax exemption will be eliminated, and profits will be taxed at the traditional capital gains tax rate. If approved by parliament, the rule will take effect next year and will only apply to assets purchased under the new regime. Cryptocurrencies purchased prior to this will still be subject to the existing rules. The proposal also stipulates that starting in 2028, banks and financial institutions will automatically withhold taxes, with the Ministry of Finance estimating that €160 million will be collected in 2028, increasing to €350 million by 2030. The proposal has sparked political discussions, as the Green Party's previous attempt to eliminate the tax exemption for cryptocurrency investments was rejected in May, and the AfD party has criticized this proposal.

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