German Federal Tax Court recognizes cryptocurrencies as a taxable assetThe German Federal Tax Court (BFH) received an appeal from a crypto investor who challenged the tax authorities and the Cologne Financial Court's decision, claiming income tax on income from the sale of an asset. The plaintiff argued that the taxation of private sales involves the sale or exchange of "other assets." However, the German Income Tax Act (EStG) does not qualify crypto-assets as "other assets" in the aforementioned sense.
After reviewing the cryptoinvestor's complaint, the BFH agreed with the conclusions of the court of first instance and the tax authorities. The court's decision was motivated by the fact that in this case the plaintiff made a profit from the sale of cryptocurrencies, and the tax authorities lawfully classified the declared profit as taxable income from the sale of "other assets."
According to BFH, "other assets" can be tangible and intangible items, rights, certain opportunities and benefits. In addition, items of property rights that fall within the definition of "other assets" must be measurable and generally benefit future business periods. From an economic perspective, cryptocurrencies are used as a means of payment and traded on special platforms. For this reason, they can provide an economic benefit if sold.
The BFH explains that even though cryptocurrencies are technically encrypted data packets, the technical details do not change the economic content of cryptoassets and are not decisive. The court concluded that cryptocurrencies can be classified as "other assets" and therefore fall within the tax base.
In January, the Budget Committee of the European Parliament proposed to use funds received from taxation of capital gains, mining and cryptocurrency transactions to finance expenditure items of national budgets of EU countries.
