JAKARTA - Germany's Federal Ministry of Finance (BaFin) published a 24-page document on Tuesday, May 10 outlining clear income tax rules for cryptocurrencies and virtual assets. Tax practitioners, businesses, and individual taxpayers now have clear directions on the tax requirements for acquiring, trading, and selling cryptocurrencies.
The trick is that individuals who sell BTC or ETH more than 12 months after the acquisition will not be taxed on the sale if they make a profit. The Parliamentary Secretary of State, Katja Hessel, also answered questions around long-term cryptocurrency betting.
“For private individuals, the sale of Bitcoin and Ether purchased is tax-free after one year. The time limit is not extended to ten years if, for example, Bitcoin was previously used for a loan or a taxpayer provides ETH as a bet for someone else to create their block,” Hessel said, quoted by Cointelegraph.
Germany asked companies, institutions and individuals in mid-2021 to provide input into tax considerations around the use of cryptocurrencies as well as staking and lending protocols.
The main focal point is the special clause in the German Income Tax Act. Section 23 provides that the windfall of any asset sold after one year from its acquisition is tax-free.
Many question whether lending or staking virtual assets will lead to an extension of the period during which private sales of virtual currencies used for this purpose are taxed. The German Ministry of Finance stated that the 10-year period does not apply to cryptocurrencies.
In addition, Bitcoin miners who earn freshly minted BTC will also be exempt from paying taxes after one year of detention. Hessel also indicated that the Federal Ministry of Finance will continue to issue further guidance on the use and trading of cryptocurrencies.
Germany has taken a proactive approach to cryptocurrency regulation and supervision, adopting a national blockchain strategy in 2019. From January 2020, cryptocurrency service providers including exchanges and storage platforms are required to obtain a license from BaFin to ensure the sector operates to the same standards as conventional financial providers. service.
Germany has released favorable tax guidelines for cryptocurrency holders in the country, with the benefit of long-term Bitcoin and Ether holders being tax-free.
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