Germany Won’t Tax Cryptocurrencies Used To Make Purchases

[amih]

this is certainly good news for the crypto currency community in the german state and this is a positive signal for the entire crypto market in the country. and this is, of course, very contrary to the tax system adopted in the United States of America which argues that it considers Bitcoin as a property that requires taxation as the principle applicable to property taxation. so I think of some policies and also regulations that are done by each country this is certainly for a purpose, especially in terms of economics for the better. so whatever decisions applied by the government of a country of course as a good citizen we must still obey it.

[greensheep]

Good news, hoping that all EU countries will follow 'the leader'.
Here - Belgium - it's as always a grey zone.
Investing as a 'good house father policy' (no full time job) = no taxes
However considering it as a speculative character, going for price swings etc = 33 % taxes :-s
Grey zone as how to control? How to prove? ...?

[Lucius]

for me is logical that you not need to pay tax if you buy mobile phone or PC with BTC,but you will pay tax on capital gains if you are buying/selling cryptocurrency only with the intent to make a profit.

Why do you think that paying tax when buying smth isn't logical, globally?

I did not think that paying tax is not logical when buying something,I was thinking that when buying something with BTC we should not be additionally taxed only because we pay with BTC.In Europe we have value added tax (VAT) which is different in each country and it may be different for individual products.So when you buy let's say TV,you will pay some price-one part is going to seller,other part to manufacturer and third to the state in the form of VAT.Some extra tax if you pay that TV with BTC would not make any sense for you because the overall price would be higher in relation to the payment in fiat.

[Barley Hertog]

.Some extra tax if you pay that TV with BTC would not make any sense for you because the overall price would be higher in relation to the payment in fiat.

I've just checked Overstock.com (they accept BTC). I haven't found any TVs but I've found a TV stand It's $267.74 USD or 0.0241324 BTC. Current exchange rate is $11105 per BTC. So the BTC price is exactlty the same. Seller's tax is included already.

[jseverson]

But how would they know if someone was using it as a payment or for speculation? Do people have to keep receipts to prove they spent bitcoin as a payment for something?

If I were German I'd claim it was all payments and therefore not be eligible for any taxes on bitcoin at all...

You likely have to keep the receipts. I mean, you're free to declare that you spent 5 Bitcoins in the year on electronics and groceries, but should you be tagged for suspicious behavior, you're going to have to prove your claims. It's just like paying regular taxes; you need to be ready to prove that you have declared everything correctly because an audit is a possibility.

[Mometaskers]

But how would they know if someone was using it as a payment or for speculation? Do people have to keep receipts to prove they spent bitcoin as a payment for something?

If I were German I'd claim it was all payments and therefore not be eligible for any taxes on bitcoin at all...

I suppose they'd have establishments register a bitcoin address where they can receive payment from their customers in btc. Might be not as straightforward if it goes through another service that converts it to fiat (like when I pay in btc from my exchange wallet for my utilities).

[mersal]

This is a great news for the crypto currency users who are willing to spend their cryptos without converting them into fiat.I hope this will convince other countries also do the same if it happens then crypto currencies demand will highly increase.

[cellard]

Well this is pretty huge. Has anyone bought anything of relevance in Germany? I would like to see someone buying a car, or even better, buying a house, with 0 tax if they paid on bitcoin.

I have seen people buying real estate already with bitcoin in other countries, and now for anyone that has a decent amount of bitcoins, buying real estate in germany is very attractive they are going to be able to legally avoid taxes...

Of course, if you didn't pay taxes in increase of capital, you still don't need to pay these as soon as you use bitcoin as payment? it's pretty confusing.

[innocent93]

This will make some Tzumany waves thru Europe. I am glad that the Germans are open minded and realizes the importance of cryptocurrency.

[stompix]

Well this is pretty huge. Has anyone bought anything of relevance in Germany? I would like to see someone buying a car, or even better, buying a house, with 0 tax if they paid on bitcoin.

I have seen people buying real estate already with bitcoin in other countries, and now for anyone that has a decent amount of bitcoins, buying real estate in germany is very attractive they are going to be able to legally avoid taxes...

Of course, if you didn't pay taxes in increase of capital, you still don't need to pay these as soon as you use bitcoin as payment? it's pretty confusing.

Yeah, and the one that wrote the article isn't making things easier.
First, there will be no taxation when you buy something with cryptos, one legal reason is because in the EU you still pay VAT on purchases.

But people that believe they will escape capital gains buy buying property they forget that this is taxed different from the US. You will still taxes on the profit you make when exchanging them to euros, but not on the transfer.

There was a passage that lead to this mess

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.

There will be no VAT on euro>BTC, this doesn't mean you're going to avoid taxes on profit you have made.

[sumangs]

The German Federal Ministry of Finances considers Bitcoin as tax-exempt so long as it is used as a means of payment, Cointelegraph auf Deutsch reported Thursday, March 1.
The German federal authority published its decision to not subject purchases with Bitcoin and other cryptocurrency to taxes on Feb. 27, citing the European Court’s 2015 decision, which set a precedent for all members of the European Union.
The Court justified its taxing decision by stating that it considers cryptocurrency as a legal means of payment:
So-called virtual currencies (cryptocurrencies such as Bitcoin) are considered equal to the legal means of payment, as long as these so-called virtual currencies have been accepted as alternative and contractual means of payment by the parties involved in the transaction and have no other purpose than being used as a means of payment.”
According to the decision, a conversion from crypto to fiat or vice versa is classified as “other taxable services”. Therefore, a party that is acting as an intermediary for this exchange will not be taxed. Under this provision, operators of crypto exchanges can also get tax exemptions, “if they complete the purchase and sale of Bitcoin as an intermediary on their own behalf.”
The court decision also notes that miner fees will not be taxed, since they are paid on a voluntary basis.
These guidelines distinguish Germany from the US where The Internal Revenue Service (IRS) treats Bitcoin like property, meaning that each purchase using Bitcoin is technically considered to be a sale of property and is, therefore, subject to capital gains tax.

On the first place the government should really not tax cryptocurrencies since they do not own it. People who uses cryptocurrencies as payment have a good critical thinking that make them better than others in terms of budgeting.

[Lieldoryn]

The government will never give up taxes. You do not pay VAT when buying bitcoin. What's so surprising? VAT is paid only by enterprises. But this money they take from us. When you buy goods after the exchange of bitcoins for Fiat you pay VAT in each store. If you do not buy anything you will pay income tax. You can't hide from taxes by legal means.

[Yrett]

The government will never give up taxes. You do not pay VAT when buying bitcoin. What's so surprising? VAT is paid only by enterprises. But this money they take from us. When you buy goods after the exchange of bitcoins for Fiat you pay VAT in each store. If you do not buy anything you will pay income tax. You can't hide from taxes by legal means.

Though, if I am a freelancer and get paid with cryptocurrency, I don't pay income tax.

[Emin90]

Yes this is good news, I read it a few days ago and was happy with that. I think soon many countries in Europe and the world will such laws as bitcoin has the right to exist and be used and is not taxed because we all want.

[barbara44]

Yes this is good news, I read it a few days ago and was happy with that. I think soon many countries in Europe and the world will such laws as bitcoin has the right to exist and be used and is not taxed because we all want.

European countries are developing in this field too. But unlike Asian countries, here we are continuously lacking in this race as our governments have strictly bans bitcoins to be used. We are not allowed to trade in them, nor any sort of investment.

May God make them happier that they only allowed us to work here? It is unofficial still, but they know it and they are not stopping us from this.

[13abyknight]

This is pretty much ideal news for Bitcoin and cryptocurrencies in general as countries are pushing forward to make them exempted from taxes. Its time for the other European Union countries to step up and follow Germany's stance here which would make EU a tax-free haven for people using cryptocurrency for payments.

[cynical]

https://www.coindesk.com/germany-considers-crypto-legal-equivalent-to-fiat-for-tax-purposes/

Its a welcome but strange decision.
They are recognising bitcoin for what it was designed to do - a payment system
but they realise that at the moment bitcoin and crypto are mostly used as investment tools and not for purchasing goods/services

It kind of looks like they are encouraging the use of it but are going to catch you with taxes when converting to FIAT.

[Blackhammer321]

This is great initiation on bitcoin's approval on the german country. This is a good news specially for those who uses bitcoin as a payment or currency to buy goods/products or services. Other country should do the same as german country did because they do not own bitcoins even regulating it is not because of them. I hope our country will do it next and prove that they really want to have a progressive country.

[YzzyGo]

Makes me want to move to Germany just so that I can trade with my cryptos freely. Bold move for Germany as without taxing bitcoin transactions they may be losing on much needed tax money to further improve their country. Kudos to them.

[Procopiogamscrypto]

The German Federal Ministry of Finances considers Bitcoin as tax-exempt so long as it is used as a means of payment, Cointelegraph auf Deutsch reported Thursday, March 1.
The German federal authority published its decision to not subject purchases with Bitcoin and other cryptocurrency to taxes on Feb. 27, citing the European Court’s 2015 decision, which set a precedent for all members of the European Union.
The Court justified its taxing decision by stating that it considers cryptocurrency as a legal means of payment:
So-called virtual currencies (cryptocurrencies such as Bitcoin) are considered equal to the legal means of payment, as long as these so-called virtual currencies have been accepted as alternative and contractual means of payment by the parties involved in the transaction and have no other purpose than being used as a means of payment.”
According to the decision, a conversion from crypto to fiat or vice versa is classified as “other taxable services”. Therefore, a party that is acting as an intermediary for this exchange will not be taxed. Under this provision, operators of crypto exchanges can also get tax exemptions, “if they complete the purchase and sale of Bitcoin as an intermediary on their own behalf.”
The court decision also notes that miner fees will not be taxed, since they are paid on a voluntary basis.
These guidelines distinguish Germany from the US where The Internal Revenue Service (IRS) treats Bitcoin like property, meaning that each purchase using Bitcoin is technically considered to be a sale of property and is, therefore, subject to capital gains tax.

  This is really a good news to hear , other countries like US and south Korea are trying to find a ways through regulators on how to collect taxes in any transactions done by a virtual accounts , but not in Germany because there finance people are the one deciding that all crypto transactions are exempted on tax , it's really sound good.