The German Federal Ministry of Finance has published a document defining and framing the different types of cryptocurrency gains.
Germany takes another step toward cryptocurrencies
In particular, we learn that German citizens will be exempt from tax on their cryptocurrency gains if they have held them for more than a year. On Tuesday, Germany's Federal Ministry of Finance released its first guidelines for framing the taxation of cryptocurrencies [PDF], confirming the country's interest in developing digital assets.
In particular, the 24-page document explores how cryptocurrencies are taxed. The most crucial point mentions the tax exemption for cryptocurrency gains held for more than a year by an individual, including staking and lending.
Until now, if germans wanted to get the tax exemption on their crypto, they had to wait ten years. This figure is now reduced to just one year, thus aligning with Section 23 of the German Income Tax Act, which states that if the period between the acquisition and sale of an asset is longer than one year, then the amount of the gains is tax-free.
The document, which also mentions mining, hard forks, and airdrops, remains subject to change. However, according to the department:
"The federal Department of Finance will continue to address income tax issues related to virtual currencies and other tokens in close coordination with the highest federal-state financial authorities and with input from associations."
Germany, the number one crypto-friendly country
According to a ranking by Coincub, Germany now sits in 1st place in terms of crypto-friendly countries, taking over from Singapore. At issue is the country's institutional position placing cryptocurrencies as a long-term investment vehicle for savers, including a tax system that was already far more welcoming than most other countries.
Additionally, Germany has 1,430 Bitcoin nodes, representing 9.08% of the total global nodes, putting it in second place in nodes held just behind the United States and ahead of France, with only 3.35%.
Last month, Commerzbank, Germany's second-largest bank, applied for a license to offer cryptocurrencies to its customers. More than 11 million of its retail customers would benefit from cryptocurrency custody and exchange services if this were to fruition.
In late 2021, Paycer (PCR), a German cross-chain decentralized finance (DeFi) protocol, announced that it wanted to combine DeFi with traditional banking services (TradFi) to offer high-interest rates to a broader audience.
Finally, according to a KuCoin report from March, 44% of German citizens would be "motivated to invest in cryptocurrencies to be part of the future of finance." Europe's most prosperous country thus also looks set to dominate the cryptocurrency market in this area, given the interest in it from both individuals and institutions.