Germany moving forward with tax regulations while Binance seeks a license in Germany
In one of our previous articles, we have covered Germany as the potential most crypto-friendly country and the validity of this attribution.
Today we will report two updates concerning Germany, which may influence the crypto ecosystem.
Crypto Taxation in Germany
Firstly, Germany’s Federal Ministry of Finance clarified the tax regime applicable to the crypto ecosystem through a tax guideline1 on May 10, 2022.2
This first official document on crypto taxation answers whether the long-term for crypto holders will be one year or ten years.3 In principle, the tax-free period for the buy-to-let properties is ten years. For this reason, whether the crypto values are classified as such properties and whether the tax-free period extends to ten years is a big question.4 Accordingly, the authorities have confirmed that the tax-free period for crypto gains is one year.5
Another point highlighted by the experts regarding the Ministry’s declarations is that the crypto tokens that are not listed on any exchange will not be included in the taxation.6 This approach enables employers to issue tokens to their employees and be free of tax duties until the tokens become tradable.7
Binance Seeks a License in Germany
The other biggest news appearing at the intersection of Germany and blockchain is the Binance’s declarations regarding their will and efforts to get a license in Germany.8
Prior to these declarations, Binance had put €100 million into the French blockchain ecosystem, and it became compliant with the Plan for Business Growth and Transformation Regulation (“PACTE Law”), and now it is authorized to offer trading and custody services for cryptocurrencies on its platform in France.9
After being granted a license in France, Binance’s CEO, Changpeng Zhao, has confirmed that their team is working on licensing, and they stated that the conversations are going well so far.10
In addition to these declarations, the CEO of Solaris, a banking-as-a-service fintech with a German banking license, has revealed that they are cooperating with Binance in their licensing endeavors, and the CEO Roland Folz states that there is no reason existing against Binance to a get license in Germany.11
The licensing for crypto companies is governed by BaFin, the German Federal Financial Supervisory Authority, in Germany, and it has granted a license for the first time to a company operating in the crypto ecosystem in 2021.12 BaFin has granted the first license to Coinbase, a US Company; after that, a German company called Upvest was licensed in Germany.13
According to BaFin's licensing procedure, it will become clear whether Binance’s Europe strategy will work out perfectly.
What’s next?
After reporting the first crypto-taxation guideline and Binance’s efforts to be granted a license in Germany, we would like to highlight that the German Ministry of Finance has not specifically made declarations regarding non-fungible tokens (NFTs) yet14; for this reason, the next step that will be taken by the authorities can be regarding the taxation of NFTs. As Vircon Legal, we will keep you updated regarding this issue as things unfold.
Einzelfragen zur ertragsteuerrechtlichen Behandlung von virtuellen Währungen und von sonstigen Token, accessed via https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Steuerarten/Einkommensteuer/2022-05-09-einzelfragen-zur-ertragsteuerrechtlichen-behandlung-von-virtuellen-waehrungen-und-von-sonstigen-token.pdf?__blob=publicationFile&v=1
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.
Matsuda, Tom: Binance confirms its working to win German regulatory approval, May 18, 2022, accessed via https://www.theblockcrypto.com/linked/147548/binance-confirms-its-working-to-win-german-regulatory-approval on May 25, 2022.
Fathi, Abdelaziz: Binance in Talks with BaFin to Get License in Germany, May 19, 2022, accessed via https://financefeeds.com/binance-in-talks-with-bafin-to-get-license-in-germany/ on May 25, 2022.
Matsuda, Tom: Binance confirms its working to win German regulatory approval, May 18, 2022, accessed via https://www.theblockcrypto.com/linked/147548/binance-confirms-its-working-to-win-german-regulatory-approval on May 25, 2022.
Matsuda, Tom: Binance confirms its working to win German regulatory approval, May 18, 2022, accessed via https://www.theblockcrypto.com/linked/147548/binance-confirms-its-working-to-win-german-regulatory-approval on May 25, 2022.
Matsuda, Tom: Binance confirms its working to win German regulatory approval, May 18, 2022, accessed via https://www.theblockcrypto.com/linked/147548/binance-confirms-its-working-to-win-german-regulatory-approval on May 25, 2022.
Matsuda, Tom: Binance confirms its working to win German regulatory approval, May 18, 2022, accessed via https://www.theblockcrypto.com/linked/147548/binance-confirms-its-working-to-win-german-regulatory-approval on May 25, 2022.
Canellis, David: Germany Affirms Crypto Sold After One Year Is Tax-free, May 12, 2022, accessed via https://blockworks.co/germany-affirms-crypto-sold-after-one-year-is-tax-free/ on May 25, 2022.