The crypto market is bleeding, but the developments regarding the sector continue! In Germany, it has now become more clear about how cryptocurrencies such as bitcoin (BTC) and ethereum (ETH) are treated by the tax authorities. And it is especially good bitcoin news for the Germans.
Germans do not have to pay tax on bitcoin after 1 year
The German Ministry of Finance recently published the first-ever guidelines on the taxation of cryptocurrencies. It is a 24-page document where all kinds of things about crypto are touched upon.
This document shows, among other things, that persons who invest in bitcoin, ethereum or similar cryptocurrencies do not have to pay tax on this after one year. Bitcoins that are sold after one year are therefore not subject to profit tax.
This also applies to income from strike and crypto lending services. To strike is to passively earn crypto in a proof of stake (PoS) network as Cardano (ADA). Earlier there was talk of the one-year term being extended to 10 years as soon as an investor uses the crypto within a loan service or to strike, but that is not the case, according to Parliamentary State Secretary Katja Hessel:
“For individuals, the sale of purchased bitcoin and ether is tax-free after one year. The deadline will not be extended to ten years if, for example, bitcoin has previously been used for loans or if the taxpayer has provided ether as a stake to someone else to create his bloc.”
Positive development for crypto
The new guidelines are positive for crypto because there is still a lot of uncertainty about the sector. Crypto is new and so much work still needs to be done. Hessel therefore states that this document will certainly not be the last:
“Of course, the forthcoming official publication of the BMF letter is not the end of our discussion on the subject, but an interim result. The rapid development of the ‘crypto world’ ensures that we do not run out of topics. There is already an additional letter about the obligations to cooperate and registration.”