German tax HODler

Germany’s first national tax guide exempts HODLers from crypto taxes on the sale of cryptocurrencies that have been held for at least a year. Now that’s more reason to HODL for our German friends!

BMF’s Crypto Tax Guide

Last week, the German Federal Ministry of Finance (BMF) issued a 24-page tax guide document detailing income tax information for cryptocurrencies and various blockchain-based assets. The guide also quoted Parliamentary State Secretary, Katja Hessel’s declaration that the sale of crypto assets like BTC or ETH is tax-free for holders who have held the assets for at least a year. The tax exemption also applies to the different digital assets used in staking or lending protocols. 

Crypto Is Key For The German Government

Late last year, the German government added crypto and blockchain tech to its coalition agreement, proclaiming them as key to the country’s development for the next few years. 

Previously, the time period of holding required to generate tax-free revenue stood at ten years. The new guidelines conform to Section 23 of the German Income Tax Act which claims a tax-free revenue if there has been at least a year’s gap between the acquisition and sale of an asset. In line with these BMF’s guidelines, the taxation of digital assets will follow similar rules. 

The paper also contains policies concerning staking, mining, and lending of digital assets, along with blockchain hard forks and token airdrops. According to Hessel, an additional document will be released soon to further highlight the collaboration between the federal states and the initiatives undertaken by BMF in this matter. 

She declared that the publication of the guidelines is not the end of their engagement with the topic, but an interim result. She added that the rapid development of the ‘crypto world’ ensures that they do not run out of topics.

Other Countries Not So Crypto-Friendly

It is worth noting that not all countries are welcoming crypto with open arms. India, for instance, has maintained its conservative approach toward crypto. RBI, India’s Central Bank, has already voiced its disapproval of digital assets. The Indian government has adopted a contrasting stance to that of Germany when it comes to taxing crypto income. In their 2022 Budget announcement, Finance Minister, Nirmala Sitharaman, announced a 30% tax on all crypto earnings. She also declared a 1% tax deduction at source for every crypto transaction. Both taxes have been detrimental to the nation’s crypto investors.

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