Germany Rules Bitcoin Is Money – And Subject To Tax

The German finance ministry says profits from Bitcoin transactions may be subject to 25 percent tax

The German Finance Ministry has ruled that the electronic currency Bitcoin is a form of “private money”, and any transactions are subject to capital gains tax, following a US ruling that Bitcoins are a form of money.

The Ministry has said that Bitcoin is a “unit of account”, and that mining them is a form of “money creation”. This means that, like stocks or shares, any profit from them is subject to Germany’s capital gains tax, at 25 percent – unless they are held for more than a year, according to the Frankfurter Allgemeine Zeitung. The ruling moves Bitcoin to a more regular footing, but still leaves open the question how the authorities will know someone has the anonymous crypto-currency unless they declare it.

Bitcoin © ppart Shutterstock 2012

Bitching about Bitcoin

Because Bitcoins (BTC) are a digital currency that are anonymous by nature, they have posed a challenge to legal authorities. The currency is based on an open-source, peer-to-peer Internet protocol, first introduced in 2009 by an anonymous developer known under the alias ‘Satoshi Nakamoto’. Bitcoins cannot be traced, and their ownership cannot be established.

A number of real-world businesses have begun to accept BTC as a form of payment, but the currency still has a reputation for its popularity among some Internet subcultures, anarchists and even real-world criminals.

The currency experienced a recent surge in value followed by a rapid fall, and has been used as the basis for fraud schemes such as a recent Ponzi scheme in the US. The recent US ruling that BTC is a form of money followed the arrest of Texan Trendon Shavers for running Bitcoin Savings and Trust on charges of fraud.

The anonymous nature of BTC is also a risk for those holding Bitcoins through legitimate means. A flaw in the Android operating system made all Android based Bitcoin wallets vulnerable to theft – and anyone losing money this way will have a hard time proving it and retrieving it.

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