Value Added Tax on bitcoins in Germany

The German Federal Ministry of Finance has answered a question on value added tax from a Member of Parliament. Thanks to this article at Coindesk for the link.

Contrary to the headline at Coindesk, this is not a “proposal” from the Ministry, but rather how they see existing law.

And they think that none of the exceptions in the law right now apply to bitcoins.

If that is true, merchants would need to pay VAT of 19 percent on the bitcoins they collect from their costumers as payment. That would be a massive disadvantage for bitcoin in competing with other payment options, none of which have this problem.

It may well be true that, as the Ministry says, right now the exceptions in the law do not apply. But obviously they should apply. As far as bitcoins are used to pay for some goods or service, they function just as traditional currency. And the Bitcoin protocol was designed and is used as an alternative to traditional currency.

There is  no good reason for  discriminating against bitcoins in this way. That point is important, since legislation is not allowed to discriminate without good reason under German Constitutional law (Article 3).

The answer from the Ministry does not explain any such good reason. It can’t, since there is none.

If there is a need to change the law to avoid this unconstitutional discrimination, eventually such a change should be enacted. As long as that is not the case, Article 4 Number 8 b) of the Value Added Tax Act should be applied by analogy.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003,

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