According to Federal Financial Supervisory Authority (BaFin) and the Federal Ministry of Finance, cryptocurrencies in Germany are not regarded as legal means of payment, but as so-called intangible assets.
Tax sales played no role in the taxation of cryptographic profits so far. The reason for this was a decision of the European Court of Justice of the European Court of Justice in 2015. In the case of Hedqvist, the ECJ decided to claim VAT exemption for Bitcoin exchange.
According to currently circulating reports, however, current practice is now called into question. For example, Tax Office Bonn on submitted a report in which VAT exemption is questioned. Instead, trading and selling of Bitcoin and other cryptocurrencies should be fully taxable.
According to the Ministry of Finance:
“Exemption from sales of virtual currency trading is out of the question. In particular, trading in and use of virtual currency sales doesn’t involve sales or the intermediation of legal transactions. Purchase and sale of Bitcoins must initially be fully subject to VAT. “
Applying this view would have incalculable consequences for further trading in cryptocurrencies in Germany. Every sale of cryptocurrencies would be taxed at 19% VAT. This measure would have a significant impact on the crypto business of smaller investors and could, in the event of unfavorable price developments, quickly lead to the tax burden to be exceeded exceeding the realized profits.
Before demand of the tax office Bonn is now put on the gold scale, it is time to keep calm. Even relying on a view of the Federal Ministry of Finance, a German tax office can not override the judgment of the highest European court. Accordingly, the requirement of the tax office Bonn on the basis of valid European law is not tenable.
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