The German Ministry of Finance recently published an official confirmation of the income tax treatment of cryptocurrencies.
Amid the growing importance of tokens and cryptocurrencies like Bitcoin, the German Federal Ministry of Finance has coordinated with financial authorities to announce the tax treatment.
The content of the notice covers various cryptocurrency matters, technically explained and classified under the income tax law.
The 2021 summer hearing is an important interim step in the development of this notice. One of the most discussed questions is whether the tax-free holding period for crypto lending and staking should apply for a minimum of 10 years.
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The final conclusion is that the term of 10 years does not apply to cryptocurrencies. Instead, the tax-free period for confirmed crypto earnings is 1 year. Citing a text from the Treasury Department, crypto analyst Patrick Hansen explained that the sale of crypto assets will remain tax-free after 1 year, even if they are used to deposit and/or lend.
German Foreign Minister Katja Hessel said that she will continue to increase tax collection regulations, emphasizing factors that are not omitted to keep up with the rapidly developing world of cryptocurrencies.
The fact that the German government is open to this type of digital asset indicates the official recognition of cryptocurrencies. This is the first time that there is a unified administrative document on this subject.