How Coindesk's #fakenews got my hyped for no reason: Germany *will* tax you for buying coffee with bitcoin

in #money7 years ago


Pixabay

Hey guys,

yesterday I came across a quite interesting article by Coindesk headlined Germany Won't Tax You for Buying Coffee With Bitcoin.
Referring to a recently published directive by the German ministry of finance based on a 2015 European Court of Justice ruling on the case C-264/14, Hedqvist, the article states:

"The guidance, published Tuesday, sets Germany apart from the U.S., where the Internal Revenue Service treats bitcoin as property for tax purposes - which means that if an American buys a cup of coffee with bitcoin, it's technically considered a sale of property and potentially subject to capital gains tax.

Instead, Germany will regard bitcoin as the equivalent to legal tender for tax purposes when used as a means of payment, according to a new document."

This very alluring alledged new policy got me rather hyped up because its implementation would imply the removal of one major obstruction to mass adoption of cryptocurrencies in my opinion. Consider the following:

Did you ever (like me for instance) consider using one of those cryptocurrency backed credit cards such as TenX, Centra and what not? Well, up till now there has always been one significant issue preventing me to do so.
With crypto being considered a private money equivalent, any purchase of a good denominated in legal tender by paying digital currency still constitutes a taxable event in the sense of a capital gain from sale of property (not unlike a foreign exchange trade between two different legal Fiat currencies). Each instance of you buying the stereotypical coffee on the street with your hard earned SBD would have to be fiscally represented in your yearly taxes. Of course regardless of tax compliance no one would want to subject himself to such a beaurocratic ordeal.


Pixabay

However upon closer inspection of the original source I am inclined to suggest a small correction to the Coindesk article's implicit claims, namely in so far as they are essentially wrong.
It is true that the directive declares instances of crypto purchases as an immediate and contractual means of payment non taxable but there is one catch. The entire document refers to VAT/turnover tax and only those.

Nowhere does it "...set[] Germany apart from the U.S..." or explicitly assert crypto payments to be non taxable or tax exempt concerning potential income taxes on capital gains. It would be a nice interpretation of things and therefore easy to believe but it simply is not stated in the ministry's document.

Conclusion

Always check orginal sources and don't fall prey to #fakenews like I temporarily did. The directive is a step in the right direction regarding establishing legal equivalence of digital currencies and official tender, but sadly for now Germany will tax you for buying coffee with Bitcoin.

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nice and informative post.

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