The German Federal Ministry of Finances decided that Germany will not tax Bitcoin used as payment. In its decision, the German federal authority has referred to the European Court’s decision of 2015.
2 March, AtoZForex – The German Federal Ministry of Finances is currently mulling the move to exempt Bitcoin from the taxation law as long as it is used as means of payment. The German officials have issued an announcement, which constitutes a decision to not subject purchases made with Bitcoin and other cryptocurrencies to taxes.
Germany will not tax Bitcoin used as payment
In its decision, the German federal authority has referred to the European Court’s decision of 2015. The decision from the court has established a precedent for all members of the European Union. In addition, the European Union Court has proved its decision in regards to the taxation by stating that it sees cryptocurrency as a legal means of payment:
“So-called virtual currencies (cryptocurrencies such as Bitcoin) are considered equal to the legal means of payment, as long as these so-called virtual currencies have been accepted as alternative and contractual means of payment by the parties involved in the transaction and have no other purpose than being used as a means of payment.”
Crypto Exchanges might be exempt from taxes
Moreover, according to the decision, a conversion from fiat to crypto and vice versa is classified as “other taxable services”. Thus, a party that is serving as an intermediary in this process will not be taxed. Also, as per this decision, the operators of cryptocurrency exchanges can be exempted from taxation “if they complete the purchase and sale of Bitcoin as an intermediary on their own behalf.”
In addition, the court decision notes that the miner fees will not be subject to taxes. This is due to the fact that they are paid to the miners on a voluntary basis. These rules differentiate Germany from the US.
In the US, the Internal Revenue Service (IRS) decided to treat Bitcoin like property. This implies that each purchase with Bitcoin will be considered as a sale of property. Therefore, it will be subject to capital gains tax.
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