Germany's Ministry of Finance issued a circular clarifying the tax obligations of cryptocurrency investors. Violations of the guidelines can lead to charges of tax evasion.
Changes in Cryptocurrency Taxation
According to the new circular, investors selling cryptocurrencies more than a year after purchase will not pay tax on the positive difference. Profits under €1,000 from all private sales in 2024 are also tax-free. Previously, the threshold was €600. The letter introduces changes such as replacing 'virtual currencies' with 'crypto assets' and clarifying tax rules for airdrops and hard forks.
Consequences of Breaching Tax Rules
Any failure to comply with these guidelines can be classified as tax evasion. Investors must meticulously document all cryptocurrency operations, including paid fees, as the tax authorities may request such records.
Agreements with the Tax Authorities
High-earning investors can establish contractual agreements with tax authorities, potentially benefiting from existing gaps in previous tax filings. Such agreements help both parties avoid penalties if appropriate disclosures and wording are provided. For example, investors might discuss tax payment conditions for income from now-defunct platforms.
The revised tax rules provide a clear framework for cryptocurrency taxation in Germany, emphasizing the importance of documenting operations and the potential for agreements with tax authorities.
