German Federal Fiscal Court confirms tax liability for crypto gains
Federal Supreme Court rules that cryptocurrencies are taxable and subject to income tax law

The German Federal Fiscal Court (Bundesfinanzhof, BFH) has ruled that gains from cryptocurrencies are also subject to income tax. The ruling thus clarifies that cryptocurrencies are to be regarded as economic assets and gains therefrom are taxable. The IX Senate of the BFH also confirmed the speculation period of one year. The ruling was published on Tuesday.
According to the BFH ruling, virtual currencies such as Bitcoin, Ethereum or Monero are economic goods that have a market value and are bought and sold as a means of payment on trading platforms. The profits from private sales transactions with cryptocurrencies are therefore subject to the Income Tax Act and must be taxed.
The BFH rejected the argument of a plaintiff that virtual currencies are ultimately only algorithms and not a real economic good. The plaintiff had made a profit of 3.4 million euros from private crypto transactions and opposed taxation, but reported the profit to the tax office.
According to the IX Senate of the Federal Fiscal Court, cryptocurrencies are a "different economic good," similar to vintage cars or event tickets, on which a profit tax is due if they are exchanged or sold within 365 days. The court stated that technical details of virtual currencies are not relevant to their status as economic goods and that it is sufficient that the good is purchasable and "amenable to separate independent valuation."
The BFH also did not accept the argument that transactions with cryptocurrencies are hardly controllable. The tax authorities had made efforts at an early stage to subject such transactions to income tax. In the meantime, there are also far-reaching obligations to provide information and control options.
The BFH ruling means that crypto investors must report their profits to the tax office and pay tax on them. The speculation period of one year also applies to cryptocurrencies, meaning that if a profit is made within 365 days of purchase, it must be taxed. The BFH's decision could have an impact on cryptocurrency trading and lead to investors taking their tax obligations more seriously and reporting their profits.
