Sunday July 3, 2022

Germany’s federal finance ministry (BMF) issued the country’s first guidance on the income tax treatment of cryptocurrencies, as well as other blockchain-based tokens.

The 24-page document issued Tuesday covers various aspects of crypto-related issues, which are explained technically and classified in terms of Germany’s income tax law.

Most important, the sale of acquired cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH) is now tax-free for individuals after one year of owning the assets, Parliamentary State Secretary Katja Hessel said in a statement. Moreover, the new guidance also applies to digital assets used in staking or lending protocols.

The latter has been one of the most intensively discussed questions in recent months, as Section 23 of the German Income Tax Act stipulates that if the period between acquisition and sale of an asset is more than one year, the full amount of the gains is tax-free.

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Previously, cryptocurrencies used for staking or to otherwise generate a profit may have had to be held for up to 10 years to receive a tax exemption. That’s no longer the case, according to the BMF.

‘Rapid development’

In addition to the buying and selling of cryptocurrencies, the newly published guidance also deals with mining, staking, lending, hard forks, and token airdrops.

“Of course, the publication of the guidance is not the end of our engagement with the topic, but an interim result,” said Hessel. “The rapid development of the ‘crypto world’ ensures that we do not run out of topics.”

According to Hessel, the German government is already working on a supplementary document that will focus on the cooperation between the federal states and their commitments to the issue.

The publication of the guidance on the income tax treatment of virtual assets comes six months after the new German government included cryptocurrencies and blockchain technology in its coalition agreement, describing them as the key elements that will support the country’s development over the next four years.

Source: Decrypt.co

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