Germany moves to end tax-free Bitcoin: coins bought after Dec. 31, 2026 would face a 26.375% tax no matter how long you hold them

Germany wants to end its tax-free Bitcoin rule for anyone who buys after Dec. 31, 2026. A draft bill from the Finance Ministry would tax gains on new purchases at 26.375%, regardless of how long they’re held. Coins bought before 2027 would keep the one-year exemption. The draft is not law, and the cabinet will review it on Oct. 14.

Under the current rules, private investors can generally sell Bitcoin and other qualifying crypto assets tax-free after holding them for more than one year. The proposed changes would preserve that treatment for coins acquired before 2027 but introduce a capital-income tax regime for digital assets purchased after December 31, 2026.

The proposal therefore creates a clear dividing line between existing holdings and future purchases, making the acquisition date a central factor in determining the tax treatment of cryptocurrency.

Tax-Free Bitcoin rules face a 2027 cutoff

Germany’s existing Tax-Free Bitcoin framework is based largely on the length of time an investor holds the asset.

Under Section 23 of Germany’s Income Tax Act, private investors generally do not pay tax on qualifying crypto gains when the asset is sold after more than one year. The supplied report also notes that total annual gains below €1,000 are exempt.

The proposed legislation would change that framework for cryptocurrency purchased from January 1, 2027.

Instead of allowing investors to rely on a one-year holding period, the draft would classify Bitcoin and similar digital assets as capital income. Under the proposal, the holding period would no longer determine whether gains from newly acquired coins are taxable.

Bitcoin Archive also highlighted the change in a post referenced by the report, stating that the “tax-free BTC era ends” under the proposed draft.

The change would not apply retrospectively to existing holdings. Coins purchased before the 2027 cutoff would retain the current one-year holding treatment under the proposal.

That distinction means Germany’s Tax-Free Bitcoin rules would effectively operate under two systems: one for qualifying assets acquired before 2027 and another for purchases made afterward.

Tax-Free Bitcoin could give way to 25% capital tax

The proposed Tax-Free Bitcoin changes would move cryptocurrency taxation closer to Germany’s existing capital-income framework.

Under the draft, crypto gains would face a 25% capital income tax, known as the Abgeltungsteuer, alongside the solidarity surcharge. The resulting effective rate would be 26.375% before any church tax.

The proposed rate would apply regardless of how long a newly purchased Bitcoin or other covered digital asset is held.

The draft would also treat income generated through staking and lending as capital income, expanding the scope of the proposed regime beyond straightforward cryptocurrency sales.

The report says the proposed crypto tax would be withheld by platforms beginning in 2028, although the underlying rules for new purchases are planned to begin on January 1, 2027.

The timing creates a two-stage implementation process, with the tax treatment applying to qualifying transactions involving assets purchased after the end of 2026 and provider withholding following later.

Existing Tax-Free Bitcoin holdings would remain protected

The draft does not propose removing the existing Tax-Free Bitcoin treatment from coins acquired before 2027.

Under the proposed transitional rules, investors holding qualifying Bitcoin purchased before January 1, 2027, would continue to benefit from the one-year holding period. A sale after more than 12 months would therefore remain tax-free under the proposal.

This makes the purchase date particularly important for German crypto holders.

A Bitcoin acquired on December 31, 2026, would fall under the existing framework, while a Bitcoin purchased the following day would be subject to the proposed capital-income rules.

The distinction also means the proposed end of Tax-Free Bitcoin treatment is not an immediate blanket tax on all cryptocurrency holdings in Germany. Rather, it is designed to change the rules governing newly acquired assets while preserving existing treatment for qualifying pre-2027 holdings.

The Finance Ministry expects the reform to generate roughly €350 million annually in the long run, according to the supplied report.

Tax-Free Bitcoin debate moves toward cabinet review

The immediate deadline for the Tax-Free Bitcoin proposal is October 6, when industry associations are expected to submit written feedback to the Finance Ministry.

The cabinet is then scheduled to discuss the draft on October 14. If the government proceeds, the legislation would move through Germany’s parliamentary process, including review by the Bundestag and Bundesrat.

The proposed end of Tax-Free Bitcoin treatment has already prompted attention from investors and the wider cryptocurrency industry because the one-year holding rule has been an important feature of Germany’s existing tax framework.

The short feedback period could limit the scope for major changes before the cabinet meeting, according to analysts cited in the source report. However, the draft could still be amended during the parliamentary process.

The proposal also comes against the backdrop of an earlier Greens bill, identified in the report as Bundestag document 21/5752, concerning the country’s crypto holding-period rules.

For the market, the proposed Tax-Free Bitcoin cutoff could create a clear incentive for some investors to consider the timing of purchases before the end of 2026. At the same time, removing the one-year tax advantage could alter the appeal of holding newly acquired cryptocurrency over longer periods.

For now, however, the proposed Tax-Free Bitcoin changes are not law. The draft remains subject to government consideration, industry feedback and parliamentary review, meaning the final rules could differ from the current proposal.

The key date for the immediate consultation process is October 6, followed by the planned cabinet discussion on October 14. If approved and enacted in its current form, the new regime would apply to covered crypto purchases from January 1, 2027.

The proposal therefore leaves German crypto investors facing a significant potential change, but not an immediate one: existing qualifying holdings would retain their current treatment, while the future of Tax-Free Bitcoin for new purchases depends on the outcome of Germany’s legislative process.

This article is for informational purposes only and does not constitute tax, legal or investment advice. The proposed legislation is not yet law and may change.