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Cryptocurrencies

Germany won't tax crypto users when purchasing with Bitcoin

Thursday 1 March 2018 | 10:37 AM CET

The German Ministry of Finance has announced that the country won’t tax Bitcoin users for using the cryptocurrency as a means of payment.

Furthermore, converting Bitcoin into a fiat currency or vice versa is considered by the German authorities a taxable miscellaneous benefit. When a buyer of goods pays with Bitcoin, an article of the EU's VAT Directive will be applied to the price of Bitcoin at the time of the transaction, as documented by the seller, according to the document.

However, as per the EU ruling, the actual act of converting a cryptocurrency to fiat or vice versa is classified as a “supply of services,” and therefore a party acting as an intermediary for the exchange will not be taxed, according to CoinDesk.

Payment fees sent to digital wallet providers or other services can likewise also be taxed, according to the document. Other aspects of the cryptocurrency ecosystem will not be taxed. Miners who receive block rewards will not be taxed, as their services are considered to be voluntary, according to the document.

Similarly, exchange operators that buy or sell Bitcoin in their own name as an intermediary will receive a tax exemption, though an exchange operating as a technical marketplace will not receive any such exemption.

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