Germany Is Now Tax Free For Crypto Sold After 1 Year
• May 13, 2022 6:22 pm • CommentsThe Finance Ministry of Germany has now released new tax guidelines that are favorable for crypto investors and has revealed that crypto will be tax free if sold after 12 months.
This is one of the regions in the world where there has been clear and established direction on how digital assets will be treated from a tax perspective.
Essentially, selling your digital assets will be tax free if you have held onto the crypto for at least one year and this new change makes it one of the first in the world.
With Germany making progress in this area, investors are hoping that the same initiative will be taken by the rest of the countries within Europe.
Germany looks a lot more intriguing with its new crypto tax guidelines. https://t.co/bStsDNyfja
— Cointelegraph (@Cointelegraph) May 13, 2022
CoinTelegraph reports:
Germany called upon companies, institutions and individuals in mid-2021 to give input into tax considerations around the use of cryptocurrencies as well as staking and lending protocols.
A major focal point was a specific clause in the Germany Income Tax Act. Section 23 rules that the windfall of any asset that is sold after a year since its acquisition is tax-free.
Many questioned whether lending or staking virtual assets would lead to an extension of the period within which a private sale of the virtual currency used for this purpose is taxable.
The German Finance Ministry stated that the 10-year period does not apply to cryptocurrencies.
Germany has taken a proactive approach to cryptocurrency regulation and oversight, adopting a national blockchain strategy in 2019.From January 2020 cryptocurrency service providers including exchanges and custody platforms were required to obtain licenses from BaFin — ensuring the sector operates to the same standards as conventional financial service providers.
The country has already had a long history when it comes to digital assets as Germany has been one of the biggest contributors to several blockchain networks like Bitcoin.
Demand for crypto is also high with around 17% reportedly owning crypto and with many more planning to buy their first crypto within the year.
With clear tax rules being laid out that benefit investors, many are expecting that these tax laws will further entice more crypto capital to enter the country.
This tax guidance would likely serve as a reference in the next few years when many other countries are expected to lay out their own guidelines.
Providing benefits for the investors, of course, is the most likely way to entice innovation and growth within the space.
Germany just announced that individuals can sell BTC or ETH tax free after holding for 1 yearhttps://t.co/0xJjz8X3Ni
— Crypto-Gucci.eth ᵍᵐ🦇🔊 (@CryptoGucci) May 11, 2022
Blockworks.co reports:
All this is good news, according to Hansen. But the letter leaves something to be desired, he notes, namely 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.
“This sets the wrong incentives in my opinion,” Hansen said. In any case, he considers Germany “definitely ahead of most other countries in the world in terms of crypto regulation, taxes, [anti-money laundering] rules, particularly its travel rule implementation, and the crypto business licensing.”
This is one of the necessary hurdles that must be passed before the industry takes off to a new level.
Fantastic news for the $REVU token holders and investors from #Germany. #HODL your crypto for more than a year, and it's #taxfree 💪https://t.co/etsVMhZFko
— Vex (@vedranvukman) May 12, 2022
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