Tax & Legal

Gains realized by taxpayers within one year from the sale or exchange of cryptocurrencies such as Bitcoin, Ethereum and Monero are subject to taxation as a private capital gain. At least as far as the year 2017 was concerned the Supreme Tax Court held that there was no normative enforcement deficit in the recognition and taxation of transactions with currency tokens which could be viewed as unconstitutional.

Today, the European Commission proposed new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers resident in the European Union. These complement the Markets in Crypto-assets (MiCA) Regulation and anti-money laundering rules.

On 10 October 2022 the OECD delivered a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto assets.

On 10 May 2022, the German Federal Ministry of Finance (MoF) published a circular on the income taxation of virtual currencies and other tokens in coordination with the Supreme Tax Authorities of the German Federal States.

On 22 March 2022, the OECD released a public consultation document concerning a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets, as well as proposed amendments to the Common Reporting Standard (CRS) for the automatic exchange of financial account information between countries.

In a current circular, the tax authorities generally comment on the VAT treatment of services provided by exchanges and other trading platforms for financial products and, in this respect, partially amends an earlier decree issued in 2018 with regard to trading platforms for the acquisition or trading of Bitcoin and other so-called crypto currencies.

The ECJ has held that dealing in “bitcoin” and other virtual currencies is equivalent to a traditional currency exchange and is, as such, exempt from VAT.