Cryptocurrency used for purchases will not be taxed in Germany

The Federal Ministry of Finances in Germany will consider Bitcoin as tax-exempt when used as a means of payment.

According to a report by Cointelegraph Auf Deutsch, the German federal authority published its decision on Feb. 27.

The Finance Ministry announced it would not subject purchases with Bitcoin, and other cryptocurrencies, to taxes, citing a European Court ruling.

The 2015 decision referred to, set a precedent for all members of the European Union.

The Court stated that it considers cryptocurrency as a legal means of payment, and justified its taxing decision by saying:

“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.”

Germany sets itself apart from the rest

A conversion from cryptocurrency to fiat or vice versa is classified as “other taxable services,” according to the decision.

If a party that is acting as an intermediary for this exchange, they will also be tax-exempt, therefore.

Operators of cryptocurrency exchanges will get exemptions from paying tax, under this provision, “if they complete the purchase and sale of Bitcoin as an intermediary on their own behalf.”

Since they are paid on a voluntary basis, miner fees will also not be taxed, the court decision notes.

These guidelines set Germany apart from the United States.

The U.S. Internal Revenue Service (IRS) is now treating Bitcoin like property.

This means that every purchase made using Bitcoin is technically considered to be a sale of a property.

So in the US, the purchase of something simple like a cup of coffee is, therefore, subject to capital gains tax when paid for with crypto.