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, bitcoin.com 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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