Cryptocurrencies in Germany
Generally speaking, Germany has a very progressive point of view on cryptocurrencies and the blockchain economy. In one of it publications, the federal government even considers it to be “the building block of the internet of the future”. However, the legal situation of Bitcoin and co. in Germany has not yet been fully determined. Officially, cryptocurrencies are not legal tender, but considered to be “intangible assets”. The German government has even issued a guidebook on how to identify and report shady crypto-projects.
The Taxation of Cryptocurrencies in Germany
The proper taxation of Bitcoin, Ethereum and co. always depends on specific circumstances, however, there is generally a distinction between private persons and legal entities, such as companies.
For private persons, any profit made through the use of cryptocurrency is considered to be “private capital gains”, also known as speculative trading. Any profit made through this is subject to income tax. Similar to the situation in Austria, it depends on how long the cryptocurrency was held before selling it. If it was held for longer than a year without ever having been exchanged for any other good, service or currency, it is tax-free. If it is traded or sold within a year though, regular income tax applies. The only exception to this situation is when the amount of all additional income does not exceed the 600€ limit.
For legal entities it very much depends on the specific business model and the extent to which cryptocurrency is used. Individual companies are subject to income tax, whereas limited liability companies and public limited companies have to pay corporate tax. Both categories additionally have to pay trade tax in Germany. An interesting aspect about this is that exchanging cryptocurrency for fiat currency is not subject to VAT.
No matter if you are a private person or part of a company, it is always highly advised to document all your actions involving cryptocurrency and also declare them in your tax report. This is the only way to safely avoid heavy fines and penalties. With the help of the Blockpit tool you can easily document all your trades in one place and automatically create your tax report.
For more information on specific types of transactions like airdrops, forks, buying with Bitcoin etc. you can read our free crypto tax guide (available in German only). In it you will find special cases of trading cryptocurrency for private persons. Aside from the theoretical input you will also find many examples to elaborate this. Taking a peek into our 40-page e-paper is definitely worth it!
Current Developments in Germany
Germany has acknowledged the potential of cryptocurrencies and is therefore also working on the rules and regulations for Bitcoin, Ethereum and co. Even banks are now allowed to store cryptocurrencies and more than 40 banks have already applied to receive a license for this.
Sources
https://www.winheller.com/bankrecht-finanzrecht/bitcointrading/bitcoinundsteuer.html
https://www.bundesregierung.breg-aktuelles/kryptowaehrungen-verbraucher-1694136
https://www.bundesfinanzministerium.Content/PressemitteilungFinanzpolitik/2019/09/2019-09-18-PM-Block-Anlage.pdf?__blob=publicationFile&v=3
https://winheller.com/blog/banken-kryptoverwahrung/
Disclaimer: The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country. If any questions occur, feel free to contact us in our social media channels.
