Germany Announces, No Tax On Crypto Sales For Investors Holding For 1 Year

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According to Katja Hessel, German Parliamentary State Secretary, crypto traders can get tax exemption benefits on the sale of digital currencies. Furthermore, if they have held onto their assets for one year or more, they will not have to pay taxes on the money they make from the crypto sales.

The Federal Finance Ministry of Germany issued 24 pages of guidelines defining blockchain technology ideas like airdrops, staking, masternodes, mining, and tax charges against sales and purchases of cryptocurrencies. 

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Germany’s leading financial institutes and 16 federal states conducted substantial discussions regarding formulating crypto taxation laws in the state for the first time. 

The state ministers had already arranged meetings the last summer to assess the viewpoints of various crypto firms like Bitkom, market contributors, and individual traders.

One of the most important questions about taxes on digital asset sales is whether or not lending or staking cryptocurrency extends the tax-free period to 10 years. This is the same as with buy-to-let properties.

Katja Hessel, State Secretary, highlighted in a statement.

The deadline is not extended to 10 years if, for example, bitcoin was previously used for lending or the taxpayer provided ether as a stake for someone else to create their block 

Patric Hansen, a well-known EU policy expert who works as a crypto business advisor for Presight Capital, reported the 10-years drop in regulation as “the most important demand of the German crypto community.”  

Hansen said; 

This is already a huge success and makes Germany a very attractive country crypto-tax-wise.

The paper issued by authorities also provides transparency concerning airdrops, a well-known way for distributing crypto tokens to attract new liquidity and users. Earlier this year, Yuga Labs distributed ApeCoin to Bored Ape NFT holders for use within the upcoming BAYC gaming ecosystem, for example.

The German finance ministry further stated that while using the exchange facility to gain access to airdrop for social network posts or personal data, beneficiaries of airdrops would be subject to income tax.

Bitcoin is trading at $28,754 with a 0.85% decline | Source: BTC/USD chart from Tradingview.com

If someone doesn’t have to do anything to receive an airdrop, they won’t have to pay income tax on it. However, airdrops can still be taxed like other gifts.

Hansen said;

People normally have to pay taxes on airdrops, but there will be a lot of exemptions.

Hansen highlighted one more important condition of the regulation for the staff member who gets paid in the form of crypto. As per the regulatory body, crypto tokens will not fall in the tax bracket if not listed on any exchange or do not possess market value. Therefore, it depicts that employees’ salaries paid in cryptocurrency would not be taxed unless they start trading. 

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Hansen believes that this news is good. However, he notes that the letter does not cover everything. In particular, the ministry still views staking digital assets via full nodes as a commercial activity, which has “big tax implications” for gains made by full-node operators compared to third-party staking providers.

Features Image from Pixabay and chart from tradingview.com