An analysis by Flick Gocke Schaumburg, Taxand Germany
In March, Germany’s Federal Ministry of Finance issued an updated circular on the income-tax treatment of cryptocurrencies, replacing “virtual currencies and other tokens” with “crypto assets”.
From a legal standpoint, the practical ‘simplification regulations’ concerning price determination and “claiming” are particularly noteworthy:
Price Determination: The value of crypto assets can be based on prices from exchanges or listings, and it doesn’t have to be the exact transaction time’s price. Instead, a daily average or closing price can be used if documented properly.
Claiming: For “(passive) staking”, the time when crypto assets are added to a wallet can be considered as their acquisition time. Unclaimed staking rewards must be accounted for by the end of the year. The simplification rule enables taxpayers to actively control the date of receipt during the year and thus the valuation of the staking rewards. However, tax authorities will generally assume the rewards are received when they can first be claimed. Taxpayers should ensure past tax returns align with these rules and make any necessary corrections.
Tax experts from our German member firm, Flick Gocke Schaumburg have published a more detailed analysis of these updates, which you can read in full here.
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