Germany’s Federal Ministry of Finance (BMF) issued the country’s first guidance on income tax treatment of cryptocurrencies as well as other blockchain-based tokens.
The 24-page document, released on Tuesday, covers various aspects of crypto-related issues, which are technically explained and classified according to Germany’s income tax law.
Most importantly, the sale of acquired cryptocurrencies such as bitcoin (BTC) or ethereum (ETH) is now tax-free to individuals one year after owning the asset, Parliamentary State Secretary Katja Hessl said in a statement. In addition, the new guidance also applies to digital assets used in mortgage or loan agreements.
The latter has been one of the most intensely discussed questions in recent months, as Section 23 of the German Income Tax Act states that if the period between the acquisition and sale of an asset exceeds one year, the full amount of the profit is tax-free.
Previously, cryptocurrencies used to place bets or otherwise generate profits may have to be held for up to 10 years to receive tax exemptions. According to BMF, this is no longer the case.
‘rapid development’
In addition to buying and selling 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 subject, but an interim outcome,” Hessel said. “The rapid development of ‘Crypto World’ ensures we don’t run out of topics.”
According to Hessel, the German government is already working on a supplementary document that will focus on cooperation between the federal states and their commitments to the issue.
The publication of guidance on the income tax treatment of virtual assets comes six months after the new German government included cryptocurrencies and blockchain technology in its alliance agreement, describing them as key elements that will support the country’s growth over the next four years.
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