2023-08-15 16:38:52
Opinions differ on bitcoin. Crypto millionaires like Julian Hosp claim at every opportunity that anyone can get rich with crypto money. Critical voices like the former Bundesbank President Jens Weidmann warn again and again: “Bitcoin is speculative, you can lose money with it.”
According to a representative survey by the digital association Bitkom, one in three residents aged 16 and over in Germany is considering investing in cryptocurrencies such as Bitcoin, despite all the imponderables. 3 percent of those surveyed say they have already bought crypto assets in the past, 6 percent plan to do so afterwards, and 23 percent do not want to rule it out.
The fact that bitcoin trading is possible in this country in a reasonably regulated environment is also thanks to the Federal Ministry of Finance. Ten years ago, the House of then Finance Minister Wolfgang Schäuble (CDU) recognized Bitcoin as “private money” and thus laid down a legal framework for the taxation of crypto profits.
“Raw material and store of value”
The fundamental decision was triggered by a parliamentary question from the FDP member of the Bundestag, Frank Schäffler. The business administration graduate wanted to know how Bitcoin profits should be taxed according to the federal government’s assessment. The answer from the Federal Ministry of Finance, which became known ten years ago (August 16, 2013) through an article in the Frankfurter Allgemeine Zeitung, was very fundamental.
The Frankfurt economist Philipp Sandner explains: “The assessment of the ministry was very fundamental for the handling of Bitcoin in Germany.” It has also held its own over the past ten years and has never had to be revised. “The decision made it clear very early on how Bitcoin should be correctly assessed, namely as a commodity and store of value, not as a currency or as a payment service or something similar. The Federal Ministry of Finance did everything right back then, and even at an early stage,” says Sandner.
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The tax consequences of the government’s response are still valid today. After a one-year holding period, speculative profits or income from the sale of mined crypto assets such as Bitcoin are tax-free. The decision from the ministry’s response ten years ago is in line with the crypto custody rules that were enacted in Germany three and a half years ago and the so-called MiCA regulation (Markets in Crypto Assets), which came into force at EU level in early July 2023 has come into force. All of these regulations encourage long-term Bitcoin investments. “As a result, Germany has developed into a fairly bitcoin-friendly country, even if many are not aware of it,” says Sandner.
Anyone who exchanged the sum of 4000 euros for Bitcoin in August 2013 and has held it since then can now exchange more than one million euros tax-free. However, anyone who would have invested 4,000 euros in Apple shares ten years ago could currently only look forward to a portfolio worth around 34,000 euros.
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