Key Insights:
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The federal finance ministry of Germany has laid down crypto tax guidelines.
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German individuals can now sell bitcoin (BTC) or ether (ETH) tax-free after one year of holding.
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The guidelines also deal with tax issues around crypto-centric activities like mining, staking, lending, hard forks, and airdrops.
Amid rising uncertainty around cryptocurrencies worldwide, as the global crypto market cap came crashing down to the $1.2 trillion mark, certain positive narratives continue to steer the crypto verses boat.
The federal finance ministry of Germany has issued guidance on the income tax treatment of crypto.
Germany established crypto tax guidelines
The German finance ministrys letter is the first nationwide instruction on the topic, confirming that staked or lent cryptocurrencies are still tax-free if held for over one year.
Additionally, Parliamentary State Secretary Katja Hessel said in a statement that individuals could sell bitcoin (BTC) or ether (ETH) tax-free after one year of holding. This guidance deals with issues like mining, staking, lending, hard forks, and airdrops.
The statement also talks about the tax treatment of buying and selling bitcoin and ether. The guide further states that the one-year period applies even to cryptocurrency that has been lent out or used by someone else as a stake to create new Ethereum blocks.
Additionally, Hessel ruled out applying the alternative ten-year holding period to cryptocurrencies to qualify for tax exemptions that apply to non-mobile assets like land.
According to the guide, income tax doesnt apply when redeeming utility tokens, the crypto assets that give a particular right, such as access to a network or to receive a specific product.
The finance ministry has referred to a 2018 court judgment concerning bearer bonds to say redeeming the tokens doesnt count as a sale under income tax law.
Fast-tracking crypto adoption？
On Jan. 1, 2022, Germany brought in a new law that aimed to encourage German banks to offer crypto services. The law required any business offering crypto services in Germany to seek a license from BaFin, Germanys Federal Financial Supervisory Authority.
Since then, considerable growth has been noted in the number of traditional finance institutions offering crypto services in Germany.
Earlier this year, Germanys Commerzbank (CBK) applied for a crypto license, making Commerzbank the first major bank in Germany to move towards crypto adoption.
As reported earlier today, Commerzbanks net profit in the first quarter increased by 124%, despite increased provisions and writedowns as a result of the Russia-Ukraine conflict.
