Good news that may impulse crypto adoption in Germany. According to the Ministry of Finance, Peter Altmaier, individuals that use cryptocurrencies as a means of payment will bot be taxed.
In a moment when the whole world is discussing major crypto regulations, this information allows crypto users in Germany to feel there is an intention of wider use of cryptocurrencies.
Germany Supports Cryptocurrencies as a Means of Payment
Germany is taking a completely different approach to cryptocurrencies compared to the United States.
As in the US, the Internal Revenue Service considers bitcoin and other cryptocurrencies as property for tax purposes, a simple transaction of cryptocurrencies may be considered a sale of property, thus, subject to capital gains tax.
In Germany, if you transact cryptocurrencies for goods or services, the virtual currency involved will be considered as a means of payment.
The Bunderministerium der Finanzen followed a 2015 European Union Court of Justice ruling on value added taxes. The court ruling sets a precedent for EU nations.
Taxes on Cryptocurrency trading in Germany - Must Watch -
They are able to tax bitcoin but providing exemptions for certain type of transaction.
The document about the tax decision stated:
“Virtual currencies (cryptocurrencies, e.g., Bitcoin) become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted.”
If an individual decides to buy something using bitcoin or other cryptocurrencies, an article of the EU’s VAT Directive will apply to the price of Bitcoin when the transaction is processed.
Following the EU ruling, converting crypto to fiat or fiat to crypto, the transaction is considered as a “supply of services,” meaning that the party involved as an intermediary for the exchange will not be taxed.
Another important aspect of the document is that cryptocurrency miners that receive block rewards will neither be taxed.
Their services are voluntary, according to the document. Crypto exchanges that are operating as a marketplace will be taxed and these who sell or buy cryptocurrencies in their own name will be exempted from taxes.