Germany publishes tax guide for cryptocurrencies

May 12, 2022

By Murtuza Merchant

Germany’s Federal Ministry of Finance has issued the country’s first guidance for tax on cryptocurrencies and other blockchain-based tokens, according to which, staked or lent cryptocurrencies will be tax-free if held for over one year.

“For private individuals, the sale of purchased Bitcoin and Ether is tax-free after one year. The deadline is not extended to ten years if, for example, bitcoin was previously used for lending or the taxpayer provided ether as a stake for someone else to create their block.” Parliamentary State Secretary Katja Hessel said in a statement.

“Of course, the forthcoming official publication of the BMF letter is not the end of our discussion of the subject, but an interim result. The rapid development of the ‘crypto world’ ensures that we do not run out of topics. A supplementary letter on the obligations to cooperate and a record is already in progress.” Hessel added.

Hessel also ruled out applying to crypto the alternative 10-year holding period to be exempt from taxes that apply to non-mobile assets such as land.

In addition, according to the guide, income tax doesn’t apply when redeeming utility tokens, the crypto assets that give a particular right, such as access to a network or to receive a certain product. The finance ministry cited a 2018 court judgment concerning bearer bonds to say redeeming the tokens doesn’t count as a sale under income tax law.

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