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This week, Germany confirmed new tax regulations related to virtual assets, outlining that investors who waited a year or more to sell their crypto holdings would face zero taxes on their digital assets.

Germans are heavily involved in Bitcoin and Ethereum, with the country offering 14% of Ethereum nodes and 9% of Bitcoin nodes, according to Blockworks. A report from Gemini claimed that 17% of Germans have invested in cryptocurrency.

In a 24-page document, Germany's taxation system regulating cryptocurrency and blockchain was clearly detailed after consultations with stakeholders across Germany's financial industry and 16 states. This is the first national tax guidance on cryptocurrency in Germany.

The country has been evaluating whether or not staking or lending cryptocurrencies provides a decade-long tax exemption on sales of the cryptocurrencies. “The deadline is not extended to ten years if, for example, Bitcoin was previously used for lending or the taxpayer provided ether as a stake for someone else to create their block,” State Secretary Katja Hessel said.

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According to Blockworks, removing the 10-year obstacle is one of the primary goals of Germany's burgeoning crypto community. “This is already a huge success and makes Germany a very attractive country crypto-tax-wise,” EU policy expert Patrick Hansen told Blockworks.

Although the new tax guidance was silent on non-fungible tokens, it did state airdrops would be subject to income tax if the recipient gives their personal data or other information. However, if the recipient does not do this, there will be no such taxation. “People normally have to pay taxes on airdrops, but there will be a lot of exemptions,” Hansen said.

Staff paid in crypto tokens also will not find their assets taxable until they are traded.

The guidance also categorized crypto tokens according to classifications like utility, security, equity, or debt. Hybrid tokens would be subject to taxation on a "transaction-by-transaction basis," according to Blockworks.

Germany is “definitely ahead of most other countries in the world in terms of crypto regulation, taxes, [anti-money laundering] rules, particularly its travel rule implementation, and the crypto business licensing,” Hansen said.