The German government is planning to significantly tighten its tax policies on digital assets. According to a recently leaked draft bill from the Ministry of Finance, Germany intends to impose a uniform capital gains tax on cryptocurrency trading profits starting in early 2027. This move marks the complete abolition of the current special provision that allows investors to enjoy capital gains tax exemption after holding assets for over a year.

Under the new regulations, proceeds from the sale of crypto assets will be classified as capital income equivalent to dividends and interest, subject to a standard tax rate of 25%. With the solidarity surcharge included, the effective combined tax burden will reach 26.375%. In contrast, the current policy levies personal income tax of up to 42% on short-term transactions held for less than a year, while completely exempting assets held for more than 12 months. It is worth noting that the new tax regime will only apply to digital assets purchased after January 1, 2027; existing holdings acquired prior to this date will continue to be grandfathered under the old tax-free rules. Additionally, investors will still be eligible for a tax-free allowance of 1,000 euros, and investment losses can be offset against gains.

This tax reform will not only cover spot trading but also include revenues generated from staking and lending. However, non-fungible tokens, security tokens, as well as certain stablecoins and real-world asset tokens, will be excluded from this tax regime. The German Ministry of Finance explicitly stated in the draft that digital assets have essentially become a private capital investment vehicle. Given that both ordinary income and traditional capital gains are taxed, it is unfair to continue granting tax-free treatment to speculative profits from crypto assets.

In terms of administration and enforcement, the automatic withholding and remittance mechanism for financial institutions and trading platforms will be delayed until 2028 to allow a one-year buffer period for system upgrades. During this interim period, if users fail to provide accurate purchase costs and dates when transferring assets across platforms, they will be directly subject to the uniform tax rate. From the perspective of fiscal revenue generation, the direct incremental revenue from this reform is relatively limited. It is estimated that new tax revenues will be around 160 million euros in 2028, gradually climbing to 350 million euros annually by 2031. Currently, the draft is still in the internal government coordination stage. As the new regulations advance, long-term allocation strategies in the local digital asset market may face reassessment, while trading platforms and custodians will gradually adapt to stricter compliance and reporting requirements.