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Written By: Anka Hakert, Esq.

WINHELLER Attorneys at Law

Frankfurt, Germany

Bitcoin Taxation in Germany Not Completely Defined

Taxation for private investors seems to be defined, at least partly. However, taxation for companies investing in Bitcoins seems to still leave some more questions open.

Private Bitcoin investors probably wonder, what taxes they have to pay for selling Bitcoins and using them as payment instrument. After the first opinion of the German Federal Ministry of Finance, private investors will not have to pay taxes, if they held their Bitcoins for more then one year. If they held it for less than a year, private investors have to pay taxes according to their individual income tax rate. So far, these rules only apply for Bitcoins that have been bought. The question how selling of mined Bitcoins should be taxed remains unanswered as of now.

Those rules don’t apply to companies. Deals involving Bitcoins, which are part of a company’s operating assets, often lead to income from commercial operations. Depend-ing on a company’s legal structure, profits can be subject to income tax or corporate tax – in addition to commercial tax. Besides income tax, sales tax (VAT) will likely be of particular interest for entrepreneurs dealing with Bitcoins.

So far, the taxation of Bitcoin sales isn’t fully defined. It looks like Bitcoin sales will be treated as sales tax requiring delivery. However, given the exemption regulation for gains made from monetary and capital movements, companies won’t have to pay sales tax on those profits.

According to a first opinion of the German Federal Ministry of Finances, no sales tax should be due, if an entrepreneur uses Bitcoins just for payment purposes. Even though said explanation might be vulnerable, one might hope, that this point of view will hold up. Otherwise, Bitcoins future as payment instrument would be very questionable.

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