First nationwide guidance on the income tax treatment of cryptocurrencies issued by Germany's federal finance ministry (BMF)


According to a
release, on Wednesday, Germany's federal finance ministry (BMF) issued the
first nationwide guidance on the income tax treatment of cryptocurrencies which
also includes other blockchain-based tokens.
It is a 24-page
document that covers and explained technically various aspects of crypto-related
issues in terms of Germany’s income tax law. In a statement, parliamentary
state secretary Katja Hessel said that after one year of owning the assets individuals
can sell acquired cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH). According
to the finance ministry, the main point of guidance covers crypto-related topics
such as mining, staking, lending, hard forks, and airdrops, as well as tax
implications of buying and selling bitcoin and ether. Further, Staking and
lending protocols may also use digital assets under the new guidance. Section
23 of the German Income Tax Act specifies that those gains are tax-free if more
than one year passes between the acquisition and sale of an asset.
This issue has
become one of the most intensely discussed topics in recent months. To qualify
for a tax exemption, cryptocurrencies held for stake or profit generation may
have to behold for up to ten years."The deadline is not extended to ten
years if, for example, bitcoin was previously used for lending or the taxpayer
provided ether as a stake for someone else to create their block," Hessel
added. In the release percentage rate of the crypto, income tax was not
disclosed.
In mid-February,
the Bahamas let residents pay taxes with cryptos. Bahamas residents began
paying taxes with cryptos in mid-February. According to Hesse, the publication
of the guidance is not the end of their engagement with the topic but an
interim result. "Of course, the publication of the guidance is not the end
of our engagement with the topic, but an interim result,” said Hessel.
According to Hessel,
the German government is already working on a supplementary document that will
focus on the cooperation between the federal states and their commitments to
the issue. The new German government included cryptocurrencies and blockchain
technology in its coalition agreement which are referred to as key elements
that will support the country’s development over the next four years. After six
months of which publication of the guidance on the income tax treatment of
virtual assets came.

Indrani bose
CBW - External Analyst
INDIA