Germany Rules Bitcoin Is Money – And Subject To Tax

The German Finance Ministry has ruled that the electronic currency Bitcoin is a form of “private money”, and any transactions are subject to capital gains tax, following a US ruling that Bitcoins are a form of money.

The Ministry has said that Bitcoin is a “unit of account”, and that mining them is a form of “money creation”. This means that, like stocks or shares, any profit from them is subject to Germany’s capital gains tax, at 25 percent – unless they are held for more than a year, according to the Frankfurter Allgemeine Zeitung. The ruling moves Bitcoin to a more regular footing, but still leaves open the question how the authorities will know someone has the anonymous crypto-currency unless they declare it.

Bitching about Bitcoin

Because Bitcoins (BTC) are a digital currency that are anonymous by nature, they have posed a challenge to legal authorities. The currency is based on an open-source, peer-to-peer Internet protocol, first introduced in 2009 by an anonymous developer known under the alias ‘Satoshi Nakamoto’. Bitcoins cannot be traced, and their ownership cannot be established.

A number of real-world businesses have begun to accept BTC as a form of payment, but the currency still has a reputation for its popularity among some Internet subcultures, anarchists and even real-world criminals.

The currency experienced a recent surge in value followed by a rapid fall, and has been used as the basis for fraud schemes such as a recent Ponzi scheme in the US. The recent US ruling that BTC is a form of money followed the arrest of Texan Trendon Shavers for running Bitcoin Savings and Trust on charges of fraud.

The anonymous nature of BTC is also a risk for those holding Bitcoins through legitimate means. A flaw in the Android operating system made all Android based Bitcoin wallets vulnerable to theft – and anyone losing money this way will have a hard time proving it and retrieving it.

What do you know about Bitcoin? Take our quiz!