germany: Germany makes crypto beneficial properties tax-free after one 12 months even when the cash are used for staking and lending

The German Ministry of Finance in coordination with the highest financial authorities of the federal states took decision on whether the tax-free holding period for crypto lending and staking should be a minimum of 10 years. The Ministry of Finance announced on May 11 that it has published a letter on the income taxation of cryptocurrency, confirming officially that the sale of crypto assets is tax-free after 1 year even if the coins are used for staking and lending. This is the first-ever initiative that will bring nationwide uniform administrative law on the subject in Germany, cited the statement by the Ministry.
The decision is a result of the hearing that took place in 2021 where a large number of crypto associations and stakeholders voiced concern over the tax-free holding period of crypto lending and staking. The letter deals with and addresses the following issues:

  • The letter provides crypto businesses and individual taxpayers a legally secure and simple applicable guidance on the income tax treatment of virtual currencies and other tokens.
  • It deals with various crypto issues, which are technically explained and classified according to income tax law.
    • Primarily, deals with staking, lending, hard forks, airdrops, the special features of utility and security tokens under income tax law and tokens as employee income.
    • It also deals with the buying and selling of bitcoin or ether, particularly block creation or mining in bitcoin.
  • The Parliamentary State Secretary, Katja Hessel said that for private individuals, the crypto gains from the sale of purchased Bitcoin and Ether will be completely tax-free after a holding period of a year.
  • The letter clarified that the 10-year period will not apply to virtual currencies.

According to Koinly, a cryptocurrency tax calculator and portfolio tracker for traders, in Germany cryptocurrencies are considered a private asset, because of which it attracts an individual income tax rather than a capital gains tax. The country only taxes crypto if it’s sold within the same year it was bought.
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