Bitcoin will be viewed as equivalent to a legal tender when it comes to tax in Germany. The German Ministry of Finance recently declared that it would treat cryptocurrency purchases just like fiat purchases, hence would only be subject to the standard VAT norms.
The official document read,
“Virtual currencies (cryptocurrencies, e.g., Bitcoin) 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”
As per the EU ruling, the conversion of a cryptocurrency to a fiat and vice versa is categorized under “a supply of services”, and therefore any third party used for the exchange will not be taxed. Miners also fall under the same category and so their mining rewards will also not be taxed.
Alfred Horst, a banker based in Berlin says,
“This declaration by the authorities mean that the adoption of Bitcoin is encouraged. It looks like the government wants to streamline cryptocurrencies and want actual use cases.”
Alan Lambert, a blockchain believer says,
For every country that attempts to make things difficult for Bitcoin, there will be a country who will do the opposite. Think of tax havens for example. That is why banks and governments will have to embrace the technology eventually. It cannot be stopped.”
Jared, a market speculator based in the Middle East suggested,
“Honestly since most of the world is run on overinflated valuations these days, why not just tax Bitcoin and stock trades at like 5% per transaction and call that the way to pay our deficit. It’d help cool down the insane shark feed of buying/selling that drives inflation anyway”
Taxation of Bitcoin and other cryptocurrencies is most likely a good thing as this shows that the governments are identifying these virtual currencies as something legitimate. This will bring back confidence in the cryptocurrency market, hopefully resulting in a bull run.
More to that miners who receive rewards for mining will also not be taxed because their services will be taken as voluntary. The announcement also added that exchanges that buy and sell Bitcoin using their brand name would also be exempted.