Germany issued guidance on tax treatment of Cryptos

The Ministry of Finance in Germany has issued guidance on the tax treatment of Cryptos. Activities in connection with Cryptos can, depending on the circumstances of the individual case, lead to income from all types of income. In particular, income from commercial operations, income from employment, income from capital assets, income from private sales transactions or other income. The guidance is available in German here and covers the following issues below:

Income from Proof of Work and Proof of Stake

• Considered as either income from commercial operations or other income from services

Income from using Cryptos for staking

• Considered as either income from commercial operations or other income from services

Income from the sales of Cryptos

• Considered as either income from commercial operations or income from private sales transactions

Income from lending Cryptos

• Considered as either income from commercial operations or other income from services

Cryptos from hard forks

• Not recognized as income but the initial acquisition costs on the original Cryptos will be allocated to the new Cryptos
• Considered as either income from commercial operations or income from private sales transactions in subsequent sales of the new Cryptos

Income from airdrops

• Considered as either income from commercial operations or other income from services

Initial Coin Offering (ICO)

• Considered as either equity or debt depending on the legal content of the assets

Utility tokens

• Accounted for as assets under financial assets or as receivables
• No income tax implications if tokens are redeemed as sale does not exist
• Considered as income from private sales transactions if tokens are sold

Security tokens

• Accounted for securities or other financial instruments depending on the design of the tokens
• Considered as either income from capital assets, income from private sales transactions, or other income from services

Income from employment receiving Cryptos

• Considered as salary (cash payment) or benefit in kind
• Inflow of the cryptos occurs at the earliest when they can be traded
• If cryptos are provided with reduced price or fee to third parties, those acquisition costs are deducted from the proceeds from the sale and considered as wages