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German’s Finance Ministry Offers Tax exemptions to Miners and Exchange Operators

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If you are a Bitcoin miner or exchange operator in Germany, you can breathe a sigh of relief, knowing that the government will not be coming after all your hard-earned Bitcoins with tax penalties as seen in the US. The German ministry of finance (in a detailed report issued on Tuesday) is set to treat Bitcoin as legal tender that can be used for value transfer from one intermediary party to the other.

The new document sets a new tone for regulation in the crypto space, considering the recent move by the US government to consider Bitcoin and crypto coins as property and therefore subject to property tax. This move has since caused a large amount of crypto coin traders in the US to pay huge amounts of tax to Uncle Sam.

For Germans, though, the fact that the ‘Bundesministerium der Finanzen’ is rooted in the guidelines of the VAT ruling by the EU court in 2015, Bitcoin spenders as well as earners in the country will have an almost free pass with the tax man.

You Still Get Taxed for Spending Bitcoin Directly, Though

Yes, that’s right, for most crypto enthusiasts the law is not all clear as to whether all transactions will be tax-free, considering the court ruling only created a precedent for EU nations to tax cryptocurrencies, with exceptions being provided for certain transactions.

The published document by the German finance ministry, however, pointed out:

Virtual currencies become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted.

This means that a miscellaneous tax benefit shall be implemented for transactions that involve exchanging cryptocurrencies to fiat currency and vice versa. According to the article on EU’s VAT directives, exchanging from crypto to fiat is considered a ‘supply of service’ and therefore neither participant will be taxed. Bitcoin enthusiasts can, therefore, exchange their cryptocoins for fiat and buy items and services without being taxed for owning Bitcoin itself.

On the flip side, however, direct payment for goods and services with Bitcoin will be subject to a VAT taxation, including fees paid out to digital wallets and exchange platforms.

Exchanges and Miners

It’s good news for miners who earn from cryptocurrencies as their block rewards will not be taxed if the document is anything to go by. Plus, exchange operators will also enjoy a tax exemption for buying and selling cryptocoins.

Image Credit: Deposit Photos

What are your thoughts on the move by the German Finance Ministry? Talk to us below.

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