Bitcoin payments will no longer be taxed in Germany

While the sword of Damocles of domestic regulation is still hanging in the balance, foreign regulation of virtual digital currencies is gradually getting on track. Recently, the German Ministry of Finance issued a document stating that according to the 2015 EU Court of Justice ruling on value-added tax (VAT), when levying taxes, as long as Bitcoin serves as a payment method, Germany will treat Bitcoin as a concept equivalent to legal tender.

This guideline document states that if users use Bitcoin as a payment method, Germany will not impose taxes on it. This means that Bitcoin is regarded as a legal payment method in Germany and enjoys the same status as legal currency.

Germany's tax policy is specifically reflected in the fact that in cryptocurrency transactions, the party acting as a transaction intermediary does not need to pay taxes. The exchange between virtual digital currency and legal currency is a "supplementary service". But in addition, the handling fees charged by digital wallet providers and other related service providers will also be taxed. Other organizations and individuals in the cryptocurrency ecosystem, such as miners and over-the-counter buyers and sellers, are not subject to tax.

Germany's regulation of virtual digital currencies has evolved over a long period of time. On August 19, 2013, the German Ministry of Finance called Bitcoin a "digital currency" in a reply to the parliament, officially recognizing the legalization of Bitcoin. So far, it has recognized the same status as legal currency, and some of Germany's tax exemption policies are even more relaxed than Japan.