Germany’s Ministry of Finance published a draft bill on 30 September 2026 proposing new taxation rules for certain crypto-assets held as private assets, including a 25% flat rate on income and gains regardless of the holding period. The proposed withholding tax system would apply from 1 January 2028.
Germany’s Ministry of Finance published a draft bill on 30 September 2026 proposing changes to the taxation of certain crypto-assets held as private assets. The proposed legislation would classify income from qualifying crypto-assets as investment income, introduce a 25% flat rate tax and remove the holding-period exemption for gains from their disposal.
The draft bill aims to update the legal framework in response to the development of crypto-asset trading and investment opportunities, including those involving Bitcoin and Ether. The Ministry considers specific statutory rules necessary to ensure that crypto-assets are taxed in a legally certain and practicable manner.
Tax treatment of crypto-asset income and gains
Under the existing framework described in the draft bill, crypto-assets have generally been classified as other income under section 22 of the Income Tax Act (EStG). They therefore fall within the rules for private disposal transactions under section 23(1)1, no. 2 of the EStG. Gains from private disposals may be tax-exempt if the assets have been held for more than one year, while other income is subject to the general individual income tax rates of up to 45%.
The proposed rules would classify income from the use and disposal of certain crypto-assets held as private assets as investment income. Gains from disposing of qualifying exchange crypto assets acquired or received after 31 December 2026 would be taxable irrespective of the holding period, with no holding-period exemption.
Income from making exchange crypto assets available to another party, including through traditional lending and passive staking, would also be treated as investment income where the assets were acquired or received after 31 December 2026. The same treatment would apply to income from participating in processes for handling transactions involving those assets.
Scope of the proposed rules
The draft bill would introduce rules for exchange crypto assets, defined as digital representations of value that can be transferred and stored electronically, primarily using blockchains, and whose value derives from their acceptance and use as a means of exchange. Claims for the return of exchange crypto assets made available to another party would be treated in the same way.
Non-fungible tokens, security tokens and other crypto-assets that convey, or are intended to convey, real value would remain subject to the tax rules applicable to their underlying value.
The proposed rules would also exclude e-money tokens within the meaning of Article 3(1), point 7 of EU Regulation 2023/1114 that are issued in accordance with Title IV of that regulation. The draft bill states that this exclusion concerns only a small number of crypto-assets commonly referred to as stablecoins.
The subsidiary nature of investment income in relation to income from a trade or business would remain unaffected.
Withholding tax and acquisition costs
From 1 January 2028, income tax on qualifying crypto-asset income would be collected through withholding tax at a rate of 25%. Domestic crypto-asset service providers and operators, as well as domestic branches or permanent establishments of foreign providers, would be required to act as paying agents responsible for withholding the tax.
The draft bill also proposes a zero-euro (USD 0) acquisition cost for certain crypto-assets received through transfers, including airdrops and bounties, for tax purposes. In addition, it includes rules for withholding agents to calculate tax on qualifying domestic and foreign income and gains from crypto-assets.
