Germany Approves Cryptocurrency

Germany Approves Cryptocurrency as Legal Means of Payment

The German Federal Ministry of Finance would exempt tax payment from bitcoin and other cryptocurrency transactions used as a means of payment.

On Tuesday Feb. 27, the German Federal Authority issued a statement announcing its decision to consider purchases with bitcoin and other cryptocurrencies as tax exempt, citing the 2015 judgment of the European Court, which set a precedent for all members of the European Union.

With the newly introduced tax laws, Germany will regard cryptocurrencies as equivalent to legal tender when used as a means of payment. The German tax statement reads:

“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.”

According to EU’s directives, a conversion from crypto to fiat or vice versa is classified as “other taxable services”. This means that a tax exemption benefit shall be implemented for transactions that involve exchanging cryptocurrencies to fiat currency and vice versa.

Under this provision, cryptocurrency exchanges operating in the country can also benefit from tax exemptions acting as intermediaries for exchange transactions. The court’s ruling also states that the minor’s fees will not be taxed as their services are classified as ‘voluntary’ under these tax laws.

These set guidelines by the German ministry of finance are in contrast with the US government stance on cryptocurrency, where the Internal Revenue Service (IRS) considers Bitcoin as property and therefore subject to property tax.

Germany Approves Cryptocurrency

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Kane Dane