The federal finance ministry of Germany (BMF) has finally issued a 24-page document detailing the income tax treatment of cryptocurrencies.
Acquired crypto such as Bitcoin and Ethereum can now be sold tax-free after a year of ownership, said Parliamentary State Secretary Katja Hessel.
The guide confirms that this rule even applies to crypto which has been lent out or used by someone else as a stake to create new Ethereum blocks.
Hessel confirms that the previous rule wherein crypto used for staking or generating profit may have to be held for 10 years to be exempt from tax, is now not applicable.
The decision comes after several months of discussion as Section 23 of the German Income Tax Act states that if the time period between acquisition and sale of an asset is one year, the amount of gains is then tax-free.
The document also outlines the taxation rules for mining, staking, lending, hard forks, token airdrops, and tokens as employee income.
Additionally, the document clarifies that income tax is not applicable to redeeming utility tokens. Utility tokens are crypto assets that give certain access or rights instead of holding any monetary value.
Hessel says, “Of course, the forthcoming official publication of the BMF letter is not the end of our discussion of the subject, but an interim result.”
“The rapid development of the ‘crypto world’ ensures that we do not run out of topics. A supplementary letter on the obligations to cooperate and record is already in progress.”
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The Federal Financial Supervisory Authority, BaFin grants approvals to company’s to offer crypto services in Germany. Up until now, only four companies have had approval from BaFin.
The Authority has over 25 pending applications from various firms to offer crypto services, including an application from one of Germany’s largest bank, Commerzbank.