Germany is leading the Bitcoin taxing process

Is Europe really Bitcoin’s best friend? Probably. Well, the United States aren’t exactly running for that spot, so the old continent can easily take the title. This time, it’s Germany that is changing things: the German Parliament, known as Bundestag, declared that profits from the sale of Bitcoins held as an investment are exempt from taxes if the cryptocurrency is held for over one year. The decision was reported in an article published at the publication Die Welt.

The man behind this change is Frank Schäffler, of the Free Democrat Party (FDP). The member of the Bundestag Finance Committee, famous for recently criticizing  the European Central Bank, expressed his interest in Bitcoin as a way to counterbalance the current financial system.

The new German ruling sees cryptocurrency as a “privately held movable asset”, which means that the digital coins will only be subject to capital gains tax if the asset is sold within a year of purchase. If the Bitcoins are sold for profit before the one year mark, the operation will be subject to a 25 percent capital gains flat tax. But, like we said before, if one year has passed, the gains are exempt of taxes.

One issue that the Bundestag decision doesn’t cover is how the tax law must treat Bitcoin when the currency is not being used as an investment tool. Let’s say, for instance, a user is buying a product or service with digital coin. How will the taxing system work in this case? And what about the first employees out there who are already receiving their salaries in Bitcoin? There’s still a lot of work to do, but Germany has taken a solid first step.

And then, on the opposite side of Europe, is the United States. The country still seems very confused about what to do regarding cryptpcurrency. However, they are currently assessing, through the Internal Revenue Service, what guidelines should be provided to the American taxpayers who deal with Bitcoin.

For now, all we know is that, according to a new report made by the Government Accountability Office (GAO), all cryptocurrency users should be paying taxes. At least, in theory.

Via bitcoinmagazine.com