The recent bull run in Bitcoin and Co. is arousing the interest of many private and institutional investors.
In Germany, too, the digital store of value as well as other cryptocurrencies are enjoying ever-increasing attention. However, a question from the FDP parliamentary group in the Bundestag reveals that the German government is still struggling when it comes to taxing cryptocurrencies.
Currently, the German government sees little need for tax changes for cryptocurrencies. This emerges from a question from the FDP parliamentary group politician Frank Schäffler to the Federal Ministry of Finance, which is available to BTC-ECHO. According to this, the federal government is not currently planning any legal changes of its own with regard to the acquisition of or payment with cryptocurrencies. It would prefer to follow the EU’s Markets in Crypto Assets Regulation (MiCA), which is currently being planned. For example, the legislative proposal calls for crypto service providers to be subject to ongoing oversight. According to the regulation, these services would include exchange trading on crypto exchanges.
When asked how to treat the purchase of goods and services with cryptocurrencies for tax purposes, the federal government responded:
How to assess the use of cryptocurrencies for the purchase of goods and services for income tax purposes is currently being coordinated between the Federal Ministry of Finance and the supreme tax authorities of the German states. After the discussion is completed, a BMF letter coordinated between the federal and state governments will be published.
76.4% of retail investor accounts lose money trading CFDs with this provider [advertisement].
According to Frank Schäffler, this coordination has not seen any significant progress for eight years now. Regarding the hardly noticeable initiative of the German government in relation to cryptocurrencies, the FDP politician says:
The interest in cryptocurrencies is currently growing massively. But the federal government shows no interest in providing citizens in Germany with a secure legal framework for acquisition and taxation
Federal government provides hardly any new insights into Diem
There is also little new insight from the German government regarding the stablecoin Diem from the Facebook consortium. Here, when asked for an assessment of the planned introduction of Diem in Switzerland, the Finance Ministry referred to the so-called „Diem College,“ which was founded on the initiative of the Swiss FINMA and of which BaFin is also a member. Its task is primarily the exchange of information. In this respect, for example, the prudential requirements had been addressed in order to approve Diem as a payment system. However, the requirements are not formulated further in concrete terms. The German government refers to a statement by the Diem Association, in which the consortium said it would not commence its activities until the Swiss Financial Market Supervisory Authority FINMA approved the stablecoin. However, a decision by the financial supervisory authority is not yet foreseeable.
In response to further questions from the FDP parliamentary group, the letter from the German government referred to „insufficient information“ on the part of Diem, on the basis of which it was not possible to formulate precise details. Meanwhile, at the G7 meeting in December, Finance Minister Olaf Scholz was less than impressed by the rebranding of the Facebook coin. He even called the Diem a „wolf in sheep’s clothing.“ According to the SPD candidate for chancellor, renaming the currency would not solve its fundamental problems. He accuses the Diem organization and the consortium around Facebook behind it of not having tackled the regulatory risks decisively enough. The German government will not accept market entry until these deficiencies are addressed, he said.
No exchange between BaFin and PayPal
It was only in October that payment service provider PayPal caused a sensation with a bang when the U.S. financial services provider announced that users would be able to buy and sell cryptocurrencies via PayPal in the future. From 2021, users should also be able to use cryptocurrencies as a means of payment. In this regard, the FDP parliamentary group wanted to know whether the German government or BaFin was in contact with PayPal regarding the purchase and payment with cryptocurrencies. The German government denied this, referring to the Luxembourg banking regulator CSSF, which is responsible for the U.S. financial services provider.
That cryptocurrencies need a regulatory framework to be perceived as serious assets within society is no secret. Only in December, the German cabinet set a milestone when it passed a law for blockchain securities. Now would be a good time, not least due to the prospering Bitcoin, to provide clarity for investors.