Sec. 20 EStG Article · Legal position 09/2026

Draft bill on a flat tax for crypto: cabinet to decide on 14 October

What existed only as a press leak on 8/9 September 2026 is now an official ministerial draft from the Federal Ministry of Finance — a bill "reforming the taxation of certain crypto assets held privately." States and industry associations may comment until 6 October; the cabinet is due to decide on 14 October 2026. This article assesses the statutory text, with full sourcing.

Draft bill on a flat tax for crypto
The essentials
  • The draft reclassifies gains and ongoing income from "exchange crypto-assets" such as Bitcoin and Ether as investment income (new section 20(1) no. 12 and (2) sentence 1 no. 9 EStG) — taxed at a flat 25%, regardless of holding period.
  • Only crypto assets acquired or received after 31 December 2026 are affected. For existing holdings, the explanatory memorandum states sections 22 and 23 EStG continue to apply unchanged.
  • The substantive new rules take effect on 1 January 2027; automatic withholding by crypto service providers follows from 1 January 2028.
  • Without proof of acquisition cost, the draft uses 50% of disposal proceeds as the tax base for withholding.
  • Procedural status: industry consultation until 6 October 2026, cabinet consideration on 14 October 2026. The Bundestag and the Bundesrat are still pending — the draft is not yet law.
Checklist to take with you: Five points to check now — from separating holdings to the stablecoin trap. Checklist as PDF ↓

From leak to official draft

A good three weeks separate the two stages — and a meaningful difference in evidentiary weight.

WELT / Spiegel 8–9 Sep 2026

The press leak

Karsten Seibel reported exclusively for WELT, citing his own access to the draft; Der Spiegel corroborated the same day with its own access and a direct quote from the memorandum. Both newsrooms had the document before its official circulation.

BMF September 2026

Official circulation to industry

The Federal Ministry of Finance has since officially sent the draft to the states and industry associations. According to consistent reporting, nothing substantive changed compared with the leaked version — mainly the full budget figures were added.

Deadline by 6 Oct 2026

Industry consultation, six days

Comments from states and associations are only possible until 6 October 2026 — a notably short window that has itself become a point of criticism. Cabinet consideration is scheduled for 14 October 2026.

What "official" means here — and what it doesn't

Sending the draft to the states and associations makes it an official document within the legislative process. It does not make it law. Between this step and promulgation in the Federal Law Gazette still lie, at minimum, the cabinet decision, introduction to the Bundestag, committee deliberation and the Bundesrat's consent. Any of these stages can still change the text.

What the draft provides

The following comes from the statutory text and its explanatory memorandum directly, not from press reports about it.

Core content of the draft bill
PointProvision
Assets covered "Exchange crypto-assets" — crypto-assets within the meaning of Article 3(1)(5) of the MiCA Regulation (EU) 2023/1114, accepted as a means of exchange without being issued by a central bank or public authority. Claims for the return of lent exchange crypto-assets count as such too (new section 20(1) no. 12 EStG).
Exemptions E-money tokens issued under Title IV of MiCA are expressly excluded — though per the memorandum this covers only some of what is colloquially called a stablecoin. NFTs, security tokens and other crypto-assets representing real value continue under the rules for the value they represent.
System change Disposal gains move from section 23 EStG (private disposal transactions) to new section 20(2) sentence 1 no. 9 EStG (investment income) — described in the memorandum as "taxation independent of holding period." Ongoing income from lending and transaction processing falls under new section 20(1) no. 12 EStG.
Tax rate 25% flat tax (new section 43a(1) no. 1 EStG) plus the solidarity surcharge, 26.375% combined, plus church tax where applicable.
Assets received for free Airdrops and bounties: acquisition cost is set at €0 (new section 20(4b) EStG). The federal government is empowered to set further valuation and disposal-order rules by statutory instrument with Bundesrat consent.
Cutoff date New rules apply only to exchange crypto-assets acquired or received after 31 December 2026 (section 52 EStG).
Effective date The substantive rules (section 20) apply from 1 January 2027. The withholding provisions (sections 43, 43a, 44, 45a) apply only from 1 January 2028 — a transition period for implementation by crypto service providers.
Projected revenue Full-year effect per the bill: €70 million (2027), €175 million (2028), €350 million annually from 2029 — split across federal, state and municipal levels.
Procedural status Industry consultation until 6 October 2026, cabinet consideration on 14 October 2026. The Bundestag, the Bundesrat and promulgation in the Federal Law Gazette are all still pending.
From the explanatory memorandum, directly

"Crypto-assets increasingly represent a possible form of private capital investment and are acquired and disposed of via a growing market." On the purpose of the reform: the previous classification under miscellaneous income no longer adequately reflects the "speculative use, high liquidity and absence of wear" characteristic of exchange crypto-assets.

Withholding, in detail

Three mechanisms from the statutory text that barely featured in earlier coverage.

Who must withhold – and who does not

Under section 44(1) sentence 4 no. 1a EStG, the withholding duty falls expressly only on domestic crypto-asset service providers and operators within the meaning of the Crypto-Asset Tax Transparency Act — or the domestic branch or permanent establishment of a foreign provider. A foreign provider with no German branch is not covered, even where it lawfully offers its service into Germany under the MiCA passport. That follows the same logic as the existing withholding tax system generally: holding an account with a foreign bank that has no German branch triggers no German withholding either.

What happens without proof of acquisition cost

Where the withholding agent cannot rely on plausible figures from the taxpayer for acquisition cost and date, new section 43a(2) EStG assumes acquisition after 31 December 2026 — with the result that 50% of the disposal proceeds becomes the tax base, rather than the actual gain. The regular 25% rate is then applied to that base. On a €10,000 sale, that is €1,250 withheld — 12.5% of the sale amount in effect — regardless of the actual profit.

  • Sec. 44(1)(4)(1a)domestic providers only, not foreign ones without a German branch
  • Sec. 43a(2)valued at market price, cost basis from taxpayer's data
  • Without proof50% of disposal proceeds as the tax base
  • Sec. 44(1)(8)sale of crypto without consent to cover the tax

When crypto is swapped for other crypto, tax arises without any euros changing hands. For that case, new section 44(1) sentence 8 EStG lets the withholding agent debit the shortfall from an account held in the taxpayer's name — if necessary by selling crypto-assets, without the taxpayer's consent being required.

What happens to existing holdings

Per the draft's memorandum, the grandfathering is comprehensive: for crypto-assets acquired by 31 December 2026, sections 22 and 23 EStG continue to apply "unchanged" — meaning disposal gains after the twelve-month holding period remain tax-free regardless of amount, including for increases in value occurring after 2027.

Selling as a precaution to "rescue" holdings into the old rules would, on this pattern, be not just unnecessary but counterproductive — it would end that protection rather than secure it. Our main article on the holding period covers this in depth. The German assessment for existing holdings

A gap in the wording: gifts and inheritance in 2027

The transition rule turns not only on acquisition but expressly also on receipt after 31 December 2026. If a Bitcoin acquired back in 2026 is gifted or inherited in 2027, the wording could be read as classifying it as a new holding for the recipient — with an acquisition cost of €0 rather than the historical cost basis. As far as we are aware, this interpretive question has not been resolved. Anyone planning a transfer should do so before 2027, or wait until this question is clarified.

What the grandfathering depends on in every case is proof of the acquisition date. Anyone unable to fully document when a given holding was acquired bears that risk themselves — see the section on withholding without proof above.

What remains open

The statutory text is now available. What remains open is no longer its content, but its further path.

  • Whether, and with what changes, the cabinet actually adopts the draft on 14 October 2026 remains open.
  • Statements from Bitkom, the Blockchain Bundesverband and the Bitcoin Bundesverband in the ongoing industry consultation had not been published as at the time of writing — the deadline for that runs until 6 October 2026.
  • The draft's own "executive footprint" disclosure states that interest groups and external parties have not substantially contributed to its content so far — the consultation phase is still ahead of the draft, not behind it.
  • The interpretive question around gifts and inheritance of existing holdings after 2026 (above) is unresolved.
  • Political resistance remains visible, from opposite directions: parts of the CDU/CSU parliamentary group consider singling out crypto assets from gold and foreign currency a break in the system, while the Die Linke parliamentary group considers the projected additional revenue too low.

Our assessment

The statutory text now available has not changed our underlying position, which we hold publicly — through the tax working group of the Blockchain Bundesverband, as former finance director of the Bitcoin Bundesverband, and as an expert witness before the Finance Committee of the Bundestag: singling out crypto assets for different treatment than gold, commodities or foreign currency needs a justification that goes beyond the wish for additional revenue. We set out the full constitutional reasoning in our main article. The equal-treatment question, in German

On the technical side, the draft addresses a point we had previously flagged as unresolved: loss offsetting. Placing the income under section 20 EStG brings in that section's own offsetting rules (section 20(6), section 20 no. 3 sentence 4 EStG); for existing holdings, section 23(3) sentence 7 EStG continues to apply. That is a more workable solution than the earlier approach from the Bündnis 90/Die Grünen parliamentary group, which would have removed the holding period within section 23 EStG without solving this problem.

The objection to the flat tax itself still stands: the regime the draft would move crypto assets into rests on constitutional ground never conclusively settled — the Fiscal Court of Lower Saxony considered it incompatible with Article 3(1) of the Basic Law in 2022, and no ruling from the Federal Constitutional Court ever followed, since the matter ceased to be material to the underlying case. In full, in our main article (German)

Practically significant is the industry consultation now under way: with a six-day window, there is little room for a well-founded professional response — a point that is itself a legitimate criticism, independent of the draft's substance.

What to do now

As long as no law has been promulgated, nothing changes legally. With 14 October, though, the next real milestone is now concretely close.

  • Document acquisition dates and holding periods per tranche completely — without proof, withholding is based on 50% of disposal proceeds as the tax base instead of the actual acquisition cost
  • Do not sell "just in case" to rescue holdings into the old rules — on the draft available, that would be pointless or even counterproductive
  • Check whether your own trading platform is domestic or has a German branch — only then would it withhold automatically from 2028; for all others, the duty to self-declare remains
  • Bring forward planned gifts or transfers of existing holdings into 2026, or at least have them reviewed, while the interpretive question around the 2027 cutoff remains unresolved
  • Hold off on larger structural decisions until you have taken advice, rather than acting in anticipation of a law that has not been promulgated
  • Keep an eye on this article and our main piece on the holding period — we update both after the cabinet considers the draft on 14 October
Discuss your situation Main article, in German

Questions and answers

Is the draft bill official now?
Yes. The Federal Ministry of Finance has sent the draft to the states and industry associations — unlike on 8/9 September 2026, when only press reports about a leaked document existed. It is not yet law: a cabinet decision, the Bundestag and the Bundesrat are all still pending.
Does my tax liability change already?
No. Even an official ministerial draft does not change the law in force. Section 23 EStG, with its one-year holding period, remains the governing rule until a law is promulgated. The next step is cabinet consideration on 14 October 2026, followed by the Bundestag and the Bundesrat.
Are my existing crypto holdings affected?
Not directly, according to the draft text. The new rules would apply only to crypto assets acquired or received after 31 December 2026; for existing holdings, the explanatory memorandum states that sections 22 and 23 EStG continue to apply unchanged. One exception is possible under the wording, however, if an existing holding is gifted or inherited after 2026 — more on this under open questions below.
What happens if I cannot prove my acquisition cost?
An unfavourable fallback rule applies: the draft assumes acquisition after 31 December 2026 and uses 50% of the disposal proceeds as the tax base, to which the regular 25% rate is then applied — 12.5% of the entire sale amount in effect, not of the gain. Complete documentation is therefore not a minor detail.
Does every exchange withhold the tax automatically?
No — only domestic crypto-asset service providers and operators, or the domestic branch of a foreign provider (section 44(1) sentence 4 no. 1a EStG). A foreign exchange with no German branch — including many widely used international platforms — is not covered, even where it lawfully offers its service into Germany under the MiCA passport. For balances held there, the duty to self-declare in the tax return continues even after 2028; automatic withholding is the exception, not the rule.
What happens next, and by when?
States and industry associations may comment until 6 October 2026 — a notably short six-day window. Cabinet consideration is scheduled for 14 October 2026. Only after that do the Bundestag and the Bundesrat follow, and finally promulgation in the Federal Law Gazette.
Should I sell now, or buy now, in anticipation?
Nothing in the draft suggests a reason to. Existing holdings would remain tax-free under the old rules regardless; selling would only end that protection. Anyone buying after the cutoff would fall under the new rules regardless of timing. See our main article on the holding period for more.
Responsible for content: Matthias Steger, German certified tax advisor (Steuerberater), expert witness before the Finance Committee of the German Bundestag on the DAC 8 directive.
Legal position: 30 September 2026. Primary source: draft bill of the Federal Ministry of Finance, "Entwurf eines Gesetzes zur Reform der Besteuerung bestimmter Kryptowerte im Privatvermögen," Article 1 (amendments to the Income Tax Act) and its explanatory memorandum.
On the procedural status: Frank Schäffler MdB (X/Twitter, @f_schaeffler), 30 Sep 2026; Blocktrainer; kryptorevolution.de; BTC-ECHO, "Krypto-Steuer: Diese Regeln plant das Finanzministerium"; Der Betrieb, "Referentenentwurf: Steuerreform für Tauschkryptowerte."
Background: WELT, Karsten Seibel, 8 Sep 2026 (WELTplus); Der Spiegel, Gerald Traufetter, 8 Sep 2026. On the flat tax: Fiscal Court of Lower Saxony, decisions of 18 March 2022 and 10 August 2022, both 7 K 120/21; Federal Constitutional Court, 2 BvL 6/22 (closed 9 December 2022) — see also our guest contribution at BTC-ECHO (German).
The assessment of constitutionality and of the gift/inheritance interpretive question reflects our own legal view; the latter is, to our knowledge, not yet settled by the courts or the tax authorities. The statutory text may still change during the further legislative process. This article is not advice on an individual case. Where this English text and the German version differ, the German version governs.
Request a callback Our article on the holding period

Read on

Sec. 23 EStGThe one-year holding period DAC 8Reporting duties from 2026 BackgroundOur proceedings and the hearing