Germany proposes 50% tax basis on undocumented crypto sales

Germany's Federal Ministry of Finance has proposed a cryptocurrency tax reform that introduces a 50% substitute assessment basis for digital asset sales. Under this proposal, if taxpayers cannot provide credible proof of their original purchase costs, the tax would be calculated based on 50% of the total sales proceeds rather than on actual capital gains.

Industry experts and representatives have raised concerns regarding the impact on retail investors. Patrick Hansen, Senior Director for EU Strategy and Policy at Circle, stated that the measure would “hit normal consumers/investors particularly hard,” specifically those unable to technically document acquisition costs or those who have traded at a loss.

Legal experts also warned of liquidity risks. Dr. David Hötzel of the law firm Poellath noted that the rule could affect coins moved from self-custody wallets or overseas platforms to German exchanges, potentially leading to large upfront tax deductions even when real profits are minimal. The measure remains a proposal and has not yet been enacted into law.