German Finance Ministry Declares Bitcoins Taxable
Germany’s Finance Ministry has asserted that bitcoins are “units of account,” and the digital currency is now subject to taxation and regulation, though it is still not recognized as a full-fledged currency.
Personal transactions with bitcoins are permitted, but commercial transactions will require permission from the Federal Financial Supervisory Authority.
Bitcoin holders are now required to declare their bitcoins as assets and holdings in their tax returns. They will be charged a 25% capital gains tax on any profits made from bitcoins within a year. After a year, the tax will be exempted.This capital gains tax is similar to the taxation of securities, such as stocks or bonds.
This action is another case of a government exploring their options on how to actually regulate bitcoins, which have faced a flurry of regulatory actions both domestically and abroad. Keep in mind; in the month of August alone, a Texas judge declared bitcoins a currency, the U.S. Senate launched an investigation into digital currencies, and New York subpoenaed 22 bitcoin companies.
We can only speculate on how this will affect the bitcoin marketplace, not only in Germany, but abroad. This ruling could encourage other governments to try to tax and regulate bitcoins as well, which would be a huge blow against the currency’s ideal of being decentralized.