The German Federal Ministry of Finance has issued a draft proposal calling for the introduction of a 25% flat-rate tax on cryptocurrency trading profits, set to take effect in 2028. The proposal, revealed by local news outlet Die Welt, would apply to digital assets purchased after January 1, 2027.
Key details of the proposal
The draft introduces a significant change to Germany’s approach to taxing crypto assets. It calls for all crypto profits from assets acquired from 2027 onward to be subject to the country’s standard investment income tax rate.
Protections are proposed for investors who purchase digital assets before the January 2027 deadline. According to the draft, those assets would remain subject to the current legal framework, which allows profits on holdings kept for more than 12 months to be completely tax-free.
The existing regime has attracted long-term crypto investors, as Germany has so far been one of the more tax-friendly jurisdictions for digital assets held beyond one year.
Expected impact on investors and revenues
German Finance Minister Lars Klingbeil first announced the intention for a major overhaul of crypto taxation at the end of April, highlighting the government’s goal of increasing tax revenue from digital assets.
Officials estimate that these new taxation measures will bring in roughly 2 billion euros, or about $2.3 billion, in additional revenue.
Some German investors may be prompted to adjust their strategies before the cut-off date in order to benefit from existing tax exemptions.
Shifts in market structure and industry response
The proposal comes as regulators across Europe intensify their focus on cryptocurrency oversight. Similar to moves by Italy’s central bank, which has introduced new monitoring and sanctions for digital asset transfers, the German ministry aims to strengthen compliance and reporting requirements for crypto-related activities.
At the same time, while authorities work to modernize tax rules, traditional markets are witnessing deep structural change. Investors are increasingly shifting to Web3 platforms where tokenized Real-World Assets (RWAs) can be accessed directly through crypto wallets. For example, platforms such as 1stepSwap allow users to hold shares of major U.S. companies, gold, and silver without the involvement of brokers, as smart contracts automatically find the best prices and cut out intermediaries.
The current legal framework enables profits from crypto assets kept for over 12 months to be completely tax-free, making Germany a preferred destination for long-term holders. Under the new draft, however, the standard 25% flat-rate tax will be imposed on digital assets acquired from January 1, 2027, with prior purchases retaining favorable treatment.
The Federal Ministry of Finance has not yet provided additional comments regarding the draft law. Further developments will likely follow as industry participants and lawmakers review the proposal and its implications for the German crypto market.
