Germany Implements Crypto Gains Tax-Free After 1 Year

 A letter from the German Ministry of Finance confirms that crypto assets can be sold tax-free after a year, even if they are used for lending or staking.  

How Crypto gains are Taxed in Germany

Wednesday’s announcement by the German Ministry of Finance stated that it had published a letter regarding income taxation of cryptocurrency.

 It is the first time that a uniform national administrative instruction has been issued on the subject.

In a hearing last year, the finance ministry stated that one of the most discussed issues was whether crypto lending and staking should be tax-free for a minimum period of 10 years.

In coordination with the federated states, the ministry observed:

 The letter states now that virtual currencies do not fall within the 10-year limit.

Germany views cryptocurrency as a “private asset,” which means it attracts an individual income tax instead of a capital gains tax. Crypto tax firm Koinly clarified that Germany “only taxes crypto if the item is sold within the same year it was purchased.”

Koinly provides more details:

 Crypto gains, which are classified as a “private sale” in Germany, are exempt from tax after a one-year holding period.

“In addition to this, profits on crypto sales above EUR600 per year remain tax-free,” said the firm. They also noted that “When it comes time to cash in on staked cryptocurrency, that tax-free holding period for cashing out is a minimum 10 years.”

Citing the Ministry of Finance letter, Patrick Hansen, crypto advisor, explained via Twitter:

 After one year, the sale of crypto assets acquired will be tax-free even if they are used for staking/lending.

Katja Hessel, Parliamentary State Secretary, stated that the sale of acquired bitcoin or ether after one year is exempt from tax for individuals. Even if bitcoin was used previously for lending or ether was provided by the taxpayer to another person, the 10-year period does not apply.