Are Bitcoin and other cryptocurrencies tax-free?

In this first entry on my new blog, I will be answering THE central question. Is Bitcoin tax-free? You see the headline everywhere. The CJEU (none lesser authority than the European Court of Justice) is recently reported to have reached a decision which the German Federal Ministry of Finance (BMF) has reportedly confirmed. But as with all questions related to tax law, a closer look is well worth the effort.

Indeed, in its decision from October 22, 2015 the CJEU ruled that the exchange of traditional currencies for Bitcoin or other virtual currencies or of virtual currencies like Bitcoin for traditional currencies ARE EXEMPT from VAT.

And in its letter dated February 27, 2018 the BMF did indeed confirm the ruling. And that is of course a good thing. But it doesn’t mean Bitcoin is tax-free.
Buying and selling Bitcoin and other virtual currencies is exempt from VAT, meaning in terms of VAT it is tax-free.
What a relief. If it wasn’t, 19% of every sale would go to the tax authority. Even high volatility (hopefully rising) would no longer be of much use.

Please note that Bitcoin and other cryptocurrencies are not principally tax-free, especially in terms of income tax, which of course applies to everyone. This blog and the consultancy services offered here are intended to help you ascertain the ins and outs of taxation and maybe uncover a tax exemption clause or two.

I hope you enjoy visiting our page and are pleased with our consultancy services (please check out our shop). If so, why not write us a recommendation (on social media, by word-of-mouth or in writing) and we are also thankful for any constructive criticism you may have. Our page is in its infancy and not everything is likely to work bug-free despite all tests.

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