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The holding period of one year, after which no taxes apply, corresponds to the general tax regulation of foreign currency balances in Germany. In the past, ther

The holding period of one year, after which no taxes apply, corresponds to the general tax regulation of foreign currency balances in Germany. In the past, there has been a debate as to whether cryptocurrencies are actually "currencies" in terms of this general tax regulation. It seems that this debate has been saddled for a while now. However, the tax exemption also has a disadvantage. Losses cannot be offset against other taxes. If your cryptocurrency investment is losing value, you should consider selling it before one year has passed. In such a case, it is also advisable to consult a tax counsellor first, because there might be some pitfalls (a certain period between selling and re-investment might be necessary; problems might arise when an account is older than a year, though the main investment is not; not all losses can be offset against all others, etc.). Another pitfall is that the foreign currency account must not be interest-bearing. In such a case the holding period of one year is extented to ten years.

leobg 4y ago
Not sure if this has anything to do with currencies. The rule in question applies to any sale of an asset in the private domain (“Privatverkauf”). It is the same rule that would apply to reselling a house or a car or a washing machine. This is in contrast to capital gains, which are being taxed according to different rules, and where there is no such 1-year deadline. Capital gains are profits from the selling of stock, and also interest on money in your bank account. So essentially, the way the rules are being applied to cryptocurrency is simply telling us that cryptocurrency isn’t being recognized as any special form of capital, and is instead treated no different than a washing machine or a coin collection.
- bombcar 4y ago
  Which is very interested because now there's a "demand" for crypto currencies that are fixed to ... SPY say, or VTI. I wonder how long it would take the Germans to work that trick out and come down hard. I also wonder how tiny a crypto currency could be ...
  - leobg 4y ago
    Would be interesting if there was crypto fixed to individual stocks. But even then, of course, you’d be left with the risk of who guarantees the price, and who guarantees the liquidity.
dathinab 4y ago
Note that as far as I know this only applies to private buying and selling, if that is the case people which frequently buy and sell crypto also have to be careful that their doing is not classified as commercial. E.g. there are similar rules for privately selling art (through it's I thing noticeable longer then 1y) and there had been cases where people where not careful enough and it was classified as commercial activity.

leobg 4y ago

Not sure if this has anything to do with currencies. The rule in question applies to any sale of an asset in the private domain (“Privatverkauf”). It is the same rule that would apply to reselling a house or a car or a washing machine. This is in contrast to capital gains, which are being taxed according to different rules, and where there is no such 1-year deadline. Capital gains are profits from the selling of stock, and also interest on money in your bank account. So essentially, the way the rules are being applied to cryptocurrency is simply telling us that cryptocurrency isn’t being recognized as any special form of capital, and is instead treated no different than a washing machine or a coin collection.

bombcar 4y ago
Which is very interested because now there's a "demand" for crypto currencies that are fixed to ... SPY say, or VTI. I wonder how long it would take the Germans to work that trick out and come down hard. I also wonder how tiny a crypto currency could be ...
- leobg 4y ago
  Would be interesting if there was crypto fixed to individual stocks. But even then, of course, you’d be left with the risk of who guarantees the price, and who guarantees the liquidity.

dathinab 4y ago

Note that as far as I know this only applies to private buying and selling, if that is the case people which frequently buy and sell crypto also have to be careful that their doing is not classified as commercial. E.g. there are similar rules for privately selling art (through it's I thing noticeable longer then 1y) and there had been cases where people where not careful enough and it was classified as commercial activity.