Few updates of Germany regarding the Cryptocurrency taxation and Bitcoin regulation in Germany
The cryptocurrency market is a very fluctuating one hence a number of countries have still not been able to classify them into any of the financial categories. In fact, cryptocurrencies are still banned in some of the countries whereas it is highly taxed in some of the other. The adoption of the cryptocurrencies into its financial domain is difficult for the country’s financial regulators since and be a number of frauds and scams have been witnessed in the recent days which has created a sense of distrust amongst the regulators.
One of the countries which have come forward to adopt the cryptocurrencies and make it legal to use in Germany. The ministry of finance officially proclaimed that the cryptocurrencies can be used as a means of payments without being taxed. This move makes Germany the odd one out from the US where the financial regulator, Internal Revenue Services treats Bitcoin as a property to be taxed. This basically means that if any citizen of America would buy a scoop of ice cream by using Bitcoin then it is considered to be a sale of property and is liable to capital tax gains.
Bitcoin tax in Germany
The federal Ministry of Finance of Germany based put forth these guidelines based on a ruling of European Union Court of Justice on Value Added Tax. The court has ordered to create a precedent to tax Bitcoin amongst the European Union nations except for certain types of transactions.
The new German document regarded cryptocurrencies as a legal method of payment, it even justified the same in its document.
In simple words, this just means that the inter-conversion of the Fiat currencies in Bitcoin become a mixed taxable benefit to the user. According to the document, specifically when a buyer buys a good in Bitcoins then the transaction falls under EU’s VAT directive and hence it will be applied to the Bitcoin price.
As per the European union’s ruling the exchange between the Fiat currencies and the Cryptocurrencies is considered to be a supply of service and hence is not liable to tax.
The payment of fees which is charged by the digital wallet providers and similar services also can be taxed as per the document.
However other domains of the cryptocurrency space are not being taxed. For an instance, the Mining industry related to the cryptocurrencies is not taxed as per the document as it is considered to be a free choice of the miners to do the same. On similar lines, the cryptocurrency exchanges which operate in their own names, providing a service of buying and selling Bitcoins will be exempted from the tax.
$14 million sale of seized cryptocurrencies in Germany
Also recently the German authority earned almost $14 million through the sale of Bitcoin and other cryptocurrencies which they seized from there earlier criminal investigation. The sale was an emergency sale because the authorities were worried about the fluctuating market prices of the cryptocurrencies. An emergency sale is generally connected for food items are for other perishable goods whose value reduces over time. The cryptocurrencies were seized from an organization named LuL.to which was selling copyrighted ebooks for low prices. The sale sold 1,312 Bitcoins, 1,399 Bitcoin Cash tokens, 1,312 Bitcoin Gold tokens and 220 Ether.
This is a very inviting news for the cryptocurrency enthusiasts in Germany. Having taken this time the Financial Authority of Germany it can be predicted that Germany is looking forward for a wider adoption of cryptocurrencies in future. According to Peter Altmaier, Ministry of Finance of Germany, the citizens which use cryptocurrencies as a means of payment are exempted from taxation.
While the whole world is looking forward to either ban or tax the cryptocurrencies, the Finance ministry of Germany has understood the potential, that the cryptocurrencies can bring to the financial world, and hence has taken a wise decision to make the transactions tax free.
