Germany will not tax digital currency held for 1 year


Germany has long been one of the most digital currency-friendly countries and is looking to further cement its position. The German Ministry of Finance (BMF) has released the country’s first comprehensive guidelines on the tax treatment of digital currencies.

The guidelines change the country’s tax laws to account for digital currencies. Most notably, the new laws state that Germany will not impose capital gains tax on the sale of BTC and ETH held for more than a year.

The law was highlighted in a statement by German Parliamentary State Secretary Katja Hessel. She said the law still applies even when digital assets are staked to earn rewards.

“For individuals, the sale of goods purchased [BTC] and Ether is tax-exempt after one year,” the statement read.

This is a change from the previous tax policy which provided that staked digital currencies are only exempt from tax after ten years of ownership. The remainder of the 24-page document published by the BMF defines and addresses other digital currency tax issues and outlines a roadmap for continued dialogue.

Germany Shows Commitment to Adopting Digital Currency

The policy document is the result of the new German government‘s commitment to support the digital currency industry. The new regime’s manifesto states that it will return the German economy to pre-pandemic levels using innovative policies, including digitalization.

Germany, Europe’s largest economy, expects a massive influx of investment in digital currencies. According to a report by Forbes, the country’s recent approval of a “Localization of Funds Act” is setting the stage for this. The law allows institutional investors to allocate up to 5% of their holdings to Bitcoin and other digital currencies.

Germany has also been an advocate for the digital currency industry in the European Union (EU), of which it is a member. Germany has requested that the EU AML regulation cover digital currencies.

According to Germany and its supporter in the EU, the settlement will help build trust in the digital currency and make it more mainstream internationally.

The country’s commitment has won praise from industry observers. According to a recent report by Coincub, Germany was deemed the most digital currency-friendly nation in the world in the first quarter of 2022. It overtook former leader Singapore following its recent policy adoptions. .

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