Postponed Does Not Mean Canceled (Unfortunately): Planned Taxation of Crypto Assets

On September 30, 2026, the Federal Ministry of Finance (BMF) published a draft bill on the reform of taxation for certain crypto assets held as private assets. The draft fundamentally reorganizes the taxation of certain crypto assets. This creates a significant need for action on the part of banks that offer crypto asset trading.

1. Proposed Changes

The draft currently provides for changes effective as of January 1, 2027, and January 1, 2028. Since no government draft has been presented yet and the further timeline remains open (see Section 2 for more details), this briefing uses these effective dates as a working hypothesis; however, they are subject to further changes during the legislative process.

The draft distinguishes between existing and new holdings. New holdings are so-called exchange crypto assets ("Tauschkryptowerte") that customers acquire on or after January 1, 2027 (Section 52(28), sentence 28 of the draft Income Tax Act (EStG-E)). According to the draft, gains from the sale of such new holdings are subject to a flat-rate tax of 25% plus the solidarity surcharge and, if applicable, church tax, as income from capital assets, regardless of the holding period. Existing holdings that the customer has built up by December 31, 2026, will continue to be subject to the personal income tax rate and will be tax-exempt after a one-year holding period.

The draft currently provides that, as of January 1, 2027, profitable sales of new holdings will be taxable. Starting January 1, 2028, domestic banks acting as paying agents are to directly withhold and remit capital gains tax, the solidarity surcharge, and, if applicable, church tax on new holdings. If customers acquire exchange crypto assets in 2027 and sell them at a profit in the same year, they must report the gains themselves on their 2027 tax return and pay the tax assessed for 2027 – as specified in the tax assessment notice – to the relevant tax office in 2028.

Furthermore, the current draft does not require banks to assist customers with the payment of taxes for 2027 in 2028; in particular, banks, in their role as providers of crypto asset trading, are not required to issue tax certificates for 2027 to their customers. Some financial institutions already voluntarily provide their customers with non-binding tax information reports on crypto gains as a customer service. Such a practice is recommended starting in 2027 at the latest. Providing customers with clear, tax-relevant data is advisable not only in light of ancillary obligations under civil law related to crypto asset trading agreements. Clear information reports also help simplify the tax filing process and thereby contribute to customer satisfaction.

The Crypto Asset Tax Transparency Act (KStTG), which is already in effect and applies to banks offering crypto asset trading services, will support the transition phase in 2027. This ensures that authorities receive the information needed to determine the gains that, according to the draft, customers will be required to report and pay taxes on themselves in 2027, as banks offering crypto asset trading must already collect customer data (master data and tax identification data) as well as transaction data (gross amounts, units, and transaction counts for purchases, sales, and transfers, aggregated per crypto asset) for the 2026 and 2027 reporting periods and transmit them to the Federal Central Tax Office via so-called KStTG reports (Sections 3 et seq., 9 et seq., 21 KStTG).

Existing holdings may also be affected: If the bank does not know the acquisition dates and no usable customer data is available, it must, when determining the amount of tax to be withheld in 2028, assume an acquisition after December 31, 2026, and calculate the tax withholding based on 50% of the proceeds from the sale (substitute tax base pursuant to Section 43a(2), sentences 16–20 EStG-E). This means that, in the absence of knowledge of actual gains and losses, the bank must apply 50% of the sale proceeds visible to it and withhold 25% capital gains tax on this amount.

Example: In 2020, the customer purchased crypto asset A, crypto asset B, and crypto asset C for EUR 10,000 each on a third-party platform and later transferred the crypto assets to the bank's crypto asset trading and custody service without informing the bank of the date of purchase or the specific acquisition price at that time. In 2028, the customer sells all of his crypto assets for EUR 40,000 (crypto asset A), EUR 12,000 (crypto asset B), and EUR 4,000 (crypto asset C). Any gains from these sales are not actually taxable, since the crypto assets are existing holdings and the customer has held them for more than one year. If these were new holdings, the bank would have to withhold 25% of the gains as tax – that is, EUR 7,500 on the EUR 30,000 gain from crypto asset A, EUR 500 on the EUR 2,000 gain from crypto asset B, and no tax on the EUR – 6,000 loss realized on crypto asset C. However, since the bank does not know the date or price of acquisition and therefore cannot determine the actual gains or losses, it must use 50% of the sale proceeds – that is, EUR 20,000, EUR 6,000, and EUR 2,000, respectively – and withhold 25% of these amounts as capital gains tax – that is, EUR 5,000 for crypto asset A, EUR 1,500 for crypto asset B, and EUR 500 for crypto asset C.

Customers with protected existing holdings who fail to provide proof of those holdings thus risk withholding that exceeds their gain – or even withholding despite losses.

2. Unrealistic Timeline and Constitutional Concerns

As of the completion of this briefing on November 11, 2026, it is no longer realistic for the bill to take effect on January 1, 2027, through the regular legislative process: Following the canceled Cabinet meeting on October 14, no Cabinet decision on the draft was made on October 28 or November 4 either. The BMF had already cited internal government delays at the end of October. According to an unofficial statement by a former member of the Bundestag, no Cabinet review of the draft is scheduled for November. Even if the Cabinet were to approve the draft at short notice, the Bundestag would have only three session weeks remaining after the current week; at the same time, the Bundesrat would have to give its approval no later than its final plenary session of the year on December 18, 2026. CDU/CSU rapporteur Olav Gutting has announced that he will vote against the draft in the Bundestag and considers a delay of half a year or a full year to be possible.

In light of the principle of equality, the now-planned unequal treatment compared to other private assets, such as gold, is questionable. Exchange crypto assets represent neither a share in a company nor an interest claim and usually have no issuers.

The estimated tax base for existing holdings in the absence of documentation also appears questionable in light of the prohibition on retroactive legislation, as customers were naturally not yet aware of this rule when they acquired these existing holdings.

3. Covered Crypto Assets and the Concept of an Exchange Crypto Asset

The draft introduces the concept of an "exchange crypto asset." The starting point is the definition of a crypto asset under MiCAR; however, the draft additionally requires that third parties accept the crypto asset as a medium of exchange. The draft explains neither the rationale for the questionable introduction of the new term nor that for the acceptance criterion. In the explanatory memorandum to the draft, the BMF lists Bitcoin and Ether as covered crypto assets and, conversely, excludes non-fungible tokens (NFTs), security tokens, and other crypto assets intended to represent real-world value. E-money tokens as defined by MiCAR – which are fiat-backed stablecoins – are also not subject to the new taxation.

The draft now supplements the regulatory definition of a crypto asset with a new, specific tax-law definition. Even the MiCAR definition of a crypto asset is open to interpretation and raises questions of demarcation. Service providers offering crypto asset trading will therefore have to perform a two-part review in the future: from a regulatory perspective, whether a token is a crypto asset, and from a tax perspective, whether it is an exchange crypto asset. For common crypto assets such as Bitcoin and Ether, alignment is expected. For each "coin," the bank now needs a classification decision – that is, a documented review and justification explaining why the respective crypto asset does or does not meet the requirements of an exchange crypto asset, particularly its acceptance as a medium of exchange by third parties.

4. Implications for Banks Offering Crypto Asset Trading

4.1 Data Basis and Verification

For implementation at the service provider level, the simplest case is a closed loop. If a customer purchases, holds, and resells crypto assets exclusively through the same bank, the bank itself knows the acquisition date, acquisition price, and thus the capital gain. It can then distinguish between existing and new holdings and calculate the gain with significantly greater reliability. More challenging is the transfer-in, that is, bringing one's own crypto assets into custody with the bank or the crypto custodian engaged by the bank. Banks should stipulate in their contracts that customers provide them with proof of the number of units, the acquisition date (down to the minute), and the acquisition price upon transfer-in.

If the bank withholds too much or too little tax – for example, due to incorrect acquisition data, ignored exemption orders, or an incorrect classification of the crypto asset – it must make corrections, issue a corrected tax certificate (Section 45a(5) EStG), and is liable for any tax under-withheld (Section 44(5) EStG).

4.2 IT Infrastructure

Banks should configure their IT systems to automatically record taxable transactions involving exchange crypto assets, calculate and withhold the tax due, reflect corrections, and generate tax certificates. The following tax-related data must be recorded: customer, tax status, tax category of the crypto asset, acquisition date, acquisition price, number of units, sale date, market price, order of sale, exemption amount, general loss offset pool (Section 20(6) EStG), non-assessment status, church tax status, year-end adjustments, and income received in cash or in crypto assets. Banks offering crypto asset trading have already been required to collect and retain some of this data since the beginning of 2026 to fulfill their due diligence and reporting obligations under Sections 3 et seq. and 9 et seq. KStTG, in particular customer and tax residency data and aggregated transaction data per crypto asset.

Under the current capital gains tax regime, the bank must electronically file a return for the tax withheld – for example, on securities income – and, upon request, issue the customer a tax certificate in accordance with the official template (Section 45a(1) to (3) EStG). Banks must implement systems that automatically generate such returns and certificates for exchange crypto assets as well by the end of 2027.

For securities, when a securities account is transferred, the transferring institution must provide the receiving institution with the acquisition data (Section 43a(2), sentence 3 EStG); for crypto asset transfers, the draft does not mandate such a cross-institutional reporting obligation. A further difference for token-for-token transactions is that such transactions do not generate an inflow of euros. Therefore, existing systems for securities income can serve as a blueprint but are not sufficient as is.

4.3 Need for Adjustments to Contractual Documentation

Banks are not required to provide for capital gains tax withholding in their customer contracts because the law mandates it. However, the contractual documentation should transparently regulate the process. It may be advisable to create a separate document, such as "Terms and Conditions for Capital Gains Tax Withholding on Crypto Assets," which the crypto asset trading agreement incorporates by reference. In this document, the bank offering crypto asset trading should in particular stipulate that it will credit sale proceeds only on a net basis after tax withholding, process tax amounts via a tax settlement account, may make cancellations and corrections, may collect any missing amounts by direct debit, issues tax certificates, and takes into account exemption orders, non-assessment certificates, loss offsets, and church tax, including blocking notices.

In cooperation models involving an intermediary bank, an executing trading partner, and a separate custodian, the parties should contractually allocate which tasks they will assume in connection with tax withholding and which tax-related data they will exchange with the customers' consent.

4.4 Customer Information

During the transitional year 2027, when the bank does not withhold and remit taxes itself, it must inform its retail customers, as consumers, of any additional taxes or costs that it does not remit or bill (Art. 246b Section 1(1) No. 11 EGBGB). Starting in 2028, the focus of customer information will shift to how tax withholding by the bank works. Banks should review tax-related information in all customer-facing documents that explain or govern crypto asset trading: pre-contractual information, basic information, risk disclosures, tax terms and conditions, price and service lists, app notices, transaction statements, annual tax certificates, and privacy notices. Of particular relevance are the tax withholding by the bank starting in 2028, the potential obligation for customers to provide proof upon transfer-in, and the voluntary and non-binding support for the 2027 tax year.

5. Unresolved Issue of Gain Determination

The draft does not specify which market price is applicable when there are multiple price sources and trading venues, which valuation date is relevant for the price (order placement, execution, settlement, or crediting), or which units are considered sold if the customer has acquired the same token at different times and prices (order of consumption). These points directly determine the gain, the protection of existing holdings, and the amount of tax, but are left to a statutory ordinance yet to be issued. This is critical for banks because they cannot reliably program automated tax calculations until rules on prices, valuation, and order of consumption are finalized. Until then, they should prepare their system architecture – as far as possible – so that they can incorporate these parameters later.

Additional implementation requirements arise if the bank permits crypto-for-crypto transactions. In such cases, the exchange may constitute a taxable sale of the crypto asset given up, even though the customer does not receive any euro amount. If the customer's cash balance is insufficient, the bank may – as before – collect the shortfall from an account held in the customer's name and – this is new – realize non-cash capital income received in the form of crypto assets. If a third party, rather than the bank required to withhold tax, provides crypto custody, the bank should – provided the custody agreement permits it – have the customer assign or pledge their claims for delivery against the crypto custodian as security for the settlement of tax liabilities.

Recommendations for Banks Offering Crypto Asset Trading

• Banks should classify the crypto assets they offer for tax purposes as exchange crypto assets or non-covered crypto assets.
• Banks should maintain a tax data record in their IT systems for each customer and crypto asset, which includes, in particular, the acquisition date, acquisition price, number of units, and existing/new holding status.
• Banks that allow transfer-ins should require customers, prior to booking, to provide proof of at least the exact acquisition date and acquisition price through appropriate documentation.
• Banks that permit crypto-for-crypto transactions should establish an automated tax liquidity process that either collects any taxes from existing euro balances in the settlement account or immediately converts the crypto asset received into euros in the amount of the tax due.
• Banks should amend their crypto asset trading terms and conditions and customer information to ensure that tax withholding, the realization of crypto assets to cover taxes, transfer-in proof, the substitute tax base in the absence of proof of acquisition data, and self-declaration for 2027 are clearly regulated.