Germany is taking a lead within European Union established economies, deciding upon slow regulation when it comes to the world’s most popular cryptocurrency, bitcoin. It will not tax the digital asset as a form of payment, miner rewards escape the sting as well, and even some exchanges will receive exemptions.
Also read: Bitcoin Futures Regulator Allows Employees to Trade Crypto
Germany Slows on Taxing Bitcoin
Bundesministerium der Finanzen, Germany’s Federal Ministry of Finance, issued a four page document outlining its tax regime regarding bitcoin, VAT treatment of Bitcoin and other so-called virtual currencies. Using a 2015 decision from the European Union Court of Justice on value added tax (VAT), the broader EU believes it can decide the fate of taxing bitcoin. Germany too is using it as a framework.
Though filled with legalisms, the document seems to imply bitcoin as legal tender when a means of payment, thus exempting it from a typical usage tax. Interpreting usage of bitcoin “free of VAT…[the] use of Bitcoin is the use of conventional means of payment if it serves no purpose other than a pure means of payment serve,” the document defines. “The dedication of Bitcoin to the mere remuneration payment is therefore not controllable. When paying with Bitcoin, the fee is basically determined by the service provider the equivalent in the currency of the Member State in which the service takes place and to the time this performance is performed.”
When taking bitcoin from the virtual world and into euros, for example – government paper – then this would be still not be a taxable event, the document implies. This is due to the premise of bitcoin being legal tender. Bitcoin purchases per se will be subject to VAT, as are all such transactions for businesses. Service fees paid to digital wallets are also subject to tax.
A Bullish Trend
However, after describing what constitutes mining, the document concludes “The services of the miners are non-taxable transactions. The so-called transaction fee, which the miners of other users of the system is paid on a voluntary basis and is not directly related with the achievements of the miners. Also, the reward in terms of receiving new Bitcoin by the system itself is not to be considered as payment for the mines,” and therefore will not be taxed.
Under the rubric of “trading platforms,” the operator “of a trading platform its website as a technical marketplace to acquire or trade Bitcoin to market participants” will not be tax exempt, as the document calls an exemption “out of the question”. The “operator of the platform, however, the purchase and sale of Bitcoin as Intermediary in his own name, the tax exemption” is provided for so long as they do so in their “own name.”
Liberalization follows other recent bullish news from Germany regarding Bitwala launching “a new banking service with real debit cards. Its application with the Federal Financial Supervisory Authority of Germany (Bafin) is pending. Once approved, customers’ funds will be guaranteed up to €100,000. The move follows the suspension of the company’s prepaid Visa cards,” News.Bitcoin.com reported.
What do you think of Germany’s moves? Let us know in the comments section below.
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