Private investors in Germany would lose one of Europe’s most generous tax breaks for cryptocurrency under a draft bill that brings digital asset gains under the country’s flat capital income tax, a shift that would end the current tax-free treatment for holdings kept longer than a year.

The proposal from the Federal Ministry of Finance, led by Vice Chancellor Lars Klingbeil, targets crypto assets acquired after December 31, 2026. Gains on those assets would be taxed at 25% plus a 5.5% solidarity surcharge, an effective rate of 26.375%, regardless of how long an investor holds them. Existing holdings would keep today’s rules, which allow tax-free sales after a 12-month period.

The draft has been circulated among other federal ministries…