May 25, 2022

What are the taxes on cryptocurrency in Germany?

What are the taxes on cryptocurrency in Germany?

The Federal Ministry of Finance (BaFin) has published a 24-page document that sets out clear rules for taxation of profits received fromoperations with cryptocurrency and virtual assets. Tax practitioners, businesses, and individual taxpayers now have clear guidance on tax requirements when acquiring, trading, and selling cryptocurrencies.

Individuals who sell BTC or ETH formore than 12 months after the acquisition, they will not pay tax, even if they receive a profit from the sale. Parliamentary Secretary of State Katja Hessel also answered questions regarding long-term staking of cryptocurrencies:

“For individuals, the sale of purchased bitcoins andethers are not taxed after a year. The period is not extended to ten years if, for example, Bitcoin was previously used for lending or the taxpayer provided ETH for staking for someone else to create their block.”

In mid-2021, Germany called on companiesorganizations and individuals to contribute to tax rules related to the use of cryptocurrencies, as well as staking and lending protocols. An important point was a clause in the German Income Tax Act. Section 23 states that windfall gains on any asset sold after one year of its acquisition are not taxable.

As to whether lending will bring orplacement of virtual assets to extend the period during which the private sale of virtual currency used for this purpose is taxable. The German Ministry of Finance has stated that the ten-year term does not apply to cryptocurrencies.

In addition, bitcoin miners whopurchase newly issued BTC, also get rid of tax payments after a year of ownership. Hessel also indicated that the Federal Ministry of Finance will continue to issue additional guidance on the use and trading of cryptocurrencies.

Germany takes proactive approach to regulationcryptocurrencies and oversight of digital assets by adopting a national blockchain strategy in 2019. Since January 2020, cryptocurrency service providers, including exchanges and custody platforms, have been required to obtain licenses from BaFin to ensure that the sector operates to the same standards as regular financial service providers.

Where is it more profitable to buy cryptocurrency? TOP-5 exchanges

For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposit and withdrawal of funds in rubles, hryvnias, dollars and euros.

Site reliability is primarily determined bytrading volume and number of users. By all key metrics, Binance is the largest cryptocurrency exchange in the world. Binance is also the most popular cryptocurrency exchange in Russia and the CIS, since it has the largest turnover of funds and supports transfers in rubles from bank cards Visa / MasterCard and payment systems QIWI, Advcash, Payeer.

Especially for beginners, we have prepared a detailed guide: How to buy bitcoin on a crypto exchange for rubles?

Rating of cryptocurrency exchanges:

# Exchange: Website: Rating:
1 Binance (Editor's Choice) 9.7
2 Huobi 7.4
3 Exmo 6.9
4 OKEx 6.5
5 Bybit 6.3

The criteria by which the rating is set in our rating of crypto-exchanges:

  • Work reliability - stability of access to all platform functions, including uninterrupted trading, deposit and withdrawal of funds, as well as the period of work on the market and the daily trading volume.
  • Commissions - the size of the commission for trading operations within the site and the withdrawal of assets.
  • Additional features and services - futures, options, staking, NFT marketplace.
  • Feedback and support - we analyze user reviews and the quality of technical support.
  • Convenience of the interface - we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
  • final grade - the average number of points for all indicators, determines the place in the rating.

What are the taxes on cryptocurrency in Germany?