Germany will not impose taxes on bitcoin users for using cryptocurrency as a means of payment, the Ministry of Finance said.
The guide, published on Tuesday, distinguishes Germany from the United States, where the Internal Revenue Service treats Bitcoin as property for tax purposes, that is, if an American buys a cup of coffee with Bitcoin, it is technically considered a sale of property and potentially subject to capital gains tax.
In contrast, Germany will consider Bitcoin as the equivalent of legal tender, for tax purposes when it is used as a means of payment according to a new document.
The finance minister based his guidance on the decision of the European Court of Justice of 2015 on value-added taxes (VAT). The court's ruling created a precedent, in which the nations of the European Union tax Bitcoin while offering exemptions for certain types of transactions.
In particular, the new German document justified its tax decisions by considering cryptocurrencies as a legal method of payment, stating:
"Virtual currencies (cryptocurrencies, for example, Bitcoin) become the equivalent of legal means of payment, insofar as these currencies, denominated virtual, of those involved in the transaction accept as an alternative and immediate means of payment. They have been accepted. "
Source: CoinDesk