Cryptocurrency Sales After 1 Year of Possession Declared Tax-free in Germany

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  • Investors had to keep it for at least ten years before selling it out tax-free until now.
  • The crypto market is recovering after the recent bloodbath.

Because of the rising prominence of digital currencies like and , the German Federal Ministry of Finance (BMF) has issued a letter that provides comprehensive guidance for taxpayers, company owners, and other stakeholders. The 24-page paper released on Tuesday covers various facets of crypto-related difficulties, which are explained technically and categorized using German tax legislation.

Major Relief to Investors

The BMF letter outlines several crypto facts that are described and categorized technically under income tax laws. Buying and selling Bitcoin and Ether are both covered under this rule. The BMF letter covers staking, lending, hard forks, airdrops, income tax peculiarities of utility and security tokens, and tokens as employee income. For the first time in Germany’s history, a uniform, national, administrative “rule book” has been made available.

Bitcoin and Ethereum (ETH) sales in Germany are tax-free after a year of possession. For staking, the same has been stated. It is expected that the Federal Ministry of Finance will continue to work closely with the federal states’ top tax authorities and with the involvement of trade organizations on income tax problems concerning Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies. Until now, if investors wanted to deduct the value of a cryptocurrency from their taxes, they had to keep it for at least ten years before selling it out tax-free. Apparently, this is no longer the case.

In addition to cryptocurrency trading, the newly released guidelines also include mining, staking, lending, hard forks, and token airdrops. The crypto market has been sluggish following multiple events causing a severe bloodbath. However, things are turning around, and the rebound can be seen lately.