Federal Ministry of Finance (BaFin) post Tuesday’s 24-page document Overview Clarify income tax rules for cryptocurrencies and virtual assets. Tax practitioners, corporate and individual taxpayers now have clear direction on the tax requirements for buying, trading and selling cryptocurrencies.
The key point is that individuals who sell after acquiring BTC or ETH for more than 12 months will not have to pay tax if they profit from the sale. Parliamentary State Secretary Katja Hessel also spoke about the long-term collateralization of cryptocurrencies:
“For individuals, the sale of purchased bitcoin and ether after one year is tax-free. For example, if bitcoin was previously used for lending, or taxpayers offered ETH as equity for others to create their blocks, then at the end of The term will not be extended to 10 years.”
Germany calls on businesses, institutions and individuals Mid 2021 Provide input on tax considerations surrounding the use of cryptocurrencies and mortgage and lending agreements. A major focus is a specific provision in German income tax law. Section 23 provides that any windfall on the sale of an asset after one year of acquisition is exempt.
Many have questioned whether lending or pledging virtual assets would result in an extended tax period for private sales of virtual currency used for this purpose. The German Finance Ministry said the 10-year period does not apply to cryptocurrencies.
Additionally, bitcoin miners who acquire newly minted bitcoins will also be tax-exempt after holding them for one year. Hessel also said that the Federal Treasury will continue to issue further guidance on the use and trading of cryptocurrencies.
Germany has taken a proactive approach to the regulation and supervision of cryptocurrencies, Adopt a national blockchain strategy 2019. From January 2020, cryptocurrency service providers, including exchanges and custody platforms, will have to obtain a license from BaFin – ensuring the industry operates to the same standards as traditional financial service providers.
Germany has issued favorable tax guidelines for cryptocurrency holders in the country, and long-term holders of Bitcoin and Ethereum will be exempted from paying taxes.