Germany plans to slap 25% tax on crypto profits

What happened

Germany's federal government is preparing a bill to impose a 25% capital gains tax on profits from crypto investments, even if the digital assets were held for more than one year before being sold. This tax would apply to long-term holdings that are currently exempt from taxation.

Confirmed

Global impact / market context

This tax change could reduce the profit per sale for German crypto investors, making long-term holding less attractive. It may also push some investors to sell sooner or move their digital assets to countries with lower taxes, affecting overall market activity.

Analyst inference

Currently, crypto profits in Germany are tax-free if assets are held over a year, encouraging long-term investment. A new 25% tax would remove that benefit, potentially changing investor behavior and reducing demand for digital assets held by German residents.

Analyst inference

What to watch

1. Watch for the final approval of the drafted bill by the Bundesfinanzministerium, as the proposal is still in preparation and has not yet become law. Confirmed
2. Consider whether the 25% tax rate will apply retroactively to crypto assets bought before the law takes effect, or only to new purchases made after the rule is enacted. Proposed
3. Observe if other European countries follow Germany's lead in taxing long-term crypto gains, which could reduce the appeal of holding digital assets across the region. Analyst inference

Evidence

• cryptopolitan.com