The German federal finance ministry has provided guidance on the income tax treatment of cryptocurrencies, clarifying that staked or lent cryptocurrencies remain tax-free if held for more than a year.
Germany publishes a tax guide
The German Federal Ministry of Finance issued a 24-page document outlining topics like mining, staking, lending, airdrops, and the tax implications of purchasing and selling cryptocurrencies. This is the first time Germany has published nationwide crypto tax guidance. It was created in close coordination with its 16 federal states and major financial institutions.
Most crucially, the document affirms that the one-year term applies even to bitcoin that has been lent out, and the Ministry’s letter also clarifies when a user is required to pay income tax and when they are not when receiving an airdrop. However, according to lobbyists, one problem that remains unresolved is that the Ministry still considers staking cryptocurrencies as a full node to be a commercial activity with “significant tax implications.”
Is Germany crypto-friendly?
The guideline on the income tax treatment of virtual assets was published six months after the new German government included cryptocurrencies and blockchain technology in its coalition agreement, citing them as vital aspects that would boost its development over the next four years.
The German tax code has long been favorable to cryptocurrency. , its crypto tax laws were significantly more flexible than those of other countries. As a result, Germany has seen an increase in crypto exchange-traded products and relatively high adoption.