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On 20 July, 2019 the German tax court for the federal states of Berlin and Brandenburg published the first decision of a German tax court on the qualification of "bitcoins" in a provisional legal protection procedure.

Authors: Martin Bünning


The tax payer argued that the bitcoins they acquired would not qualify as an "asset" under German tax law because no commercial value could be attributed to them, so the income derived from the disposition would remain untaxed. Under German personal income tax law, income derived outside the scope of a trade or business by a private individual generally is not taxable unless it is derived from the disposition of an "asset" within a short period of time (one year for non-real estate assets and 10 years for real estate assets). Different rules apply for securities and other financial assets. German tax law defines an asset as a legal or factual position to which a value can be attributed and for which a reasonable business man would pay a consideration.

According to the tax payer, the bitcoins only represent a vague chance or opportunity to enter into a transaction and receive valuable goods, services, or money in exchange for the disposition which could not separately be valued. The tax payer also took the position that due to the technical process of the mining, only a virtual item with no real value was created and that the consideration paid was in fact a compensation for the effort of the miner. As a consequence of this understanding, the tax payer took the position that the income he derived from the disposition of the bitcoins was not taxable at all.