Germany’s ministry of Finance just said that they won’t be taxing purchases made using cryptocurrencies, making it an equivalent of a legal tender.
In countries like India and the U.S., Cryptocurrencies are seen as an asset. In India, using Cryptocurrencies to buy anything is completely illegal. Here, cryptocurrencies are considered an asset for which you have to pay capital gains tax while cashing out to make any purchases.
Citizens will be taxed when they convert their Cryptocurrencies to Fiat. But there will be none of it if Crypto is directly used to make purchases other than the standard VAT.
The court document which made this decision said, “Virtual currencies (cryptocurrencies, e.g., Bitcoin) become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted.”
Germany also announced a bunch of tax exceptions for Cryptocurrencies. Exchanges that buy or sell cryptocurrencies to be an intermediately will not be taxed. Only the users will be taxed when they cash out.
Also, miners generating revenue through cryptocurrencies will not be taxed since it is considered a voluntary activity.
Germany might be the next country which is extremely friendly to cryptocurrencies. This comes at a time when EU is looking to take a hard stance against it.