Is Germany a tax haven for crypto investors?

In Germany, cryptocurrency investors can benefit from a 0% tax rate on their profits. This is what we can read all over the internet for the past few days. If the country is indeed crypto-friendly, is it really a tax haven?

A tax of 0% … subject to conditions

Between fiat currency and digital assets, lawmakers are facing a real culture shock in the financial sphere. Some countries have nevertheless been able to jump on the cryptocurrency train. So they have put in place regulations accordingly, including a special tax regime for the new generation of digital asset investors. Germany has decided to reach them by offering preferential taxation.

Germany is seen as a tax haven for crypto investors.

Germany regards bitcoin as private money. As such, its sale entitles you to tax benefits. The rule states that cryptocurrencies are exempt from tax if the total profit generated from private sales transactions in the calendar year was less than 600 euros. In addition, regardless of the capital gains made from the sale of the digital assets, the investor will not pay any tax on the gains if they have owned them for more than a year. wallet.

The German cryptocurrency tax system

For sales under 600 euros or cryptos held for more than a year, the profits are exempt from tax. If any of these conditions are not met, the investor will pay income tax (IR). And this, on all profits from an assignment. Divestments include selling the cryptos for Euro or any other fiat currency. These also include exchanging the digital assets for another cryptocurrency or spending the cryptos on goods and services.

Under German tax law, other crypto transactions are also considered income and are therefore taxable. For example, investors must pay taxes on mining or stake out rewards. However, the tax only applies to annual income above 256 euros of additional income. The taxable amounts are the net profit on the cryptocurrency. In other words, Germany taxes the mining income that is deducted from the associated costs, such as energy costs.

Regulations designed to evolve

Much like cryptocurrency itself, crypto tax rules are constantly changing. With cryptocurrencies, Germany has started a beneficial regime for local investors. The basic idea is that if the capital is built up in Germany and the income stays there for one or more years, the trader is rewarded with zero tax. This advantageous tax regime can take a long time, but does not have to be necessary. The country may make changes depending on the evolution of cryptocurrencies.

In addition, the German Finance Minister has discussed this. He points out that this helping hand to the hodlers won’t last forever. That is obvious. The possibility of fair taxation of deposits and transactions cannot therefore be excluded. It remains to be seen when the country thinks about changes. In any case, investors in Germany, especially the most patient so far, will be able to benefit from zero capital gains tax.

Germany has a very attractive tax regime for individual long-term investments and for small annual profits. It is certain, the country is crypto-friendly. However, this does not mean that Germany is a tax haven for cryptocurrency investors. Or if, but only for holders.

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Elina Samsoudine Avatar
Elina Samsoudine

I happened upon the cryptosphere and witnessed the birth of a new era, that of DeFi. It’s all about economic freedom, transparency and opportunities available to all. This is a universe that deserves to be known.

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