5 Important Facts About Cryptocurrency Use In Germany You Should Be Aware Of
Cryptocurrency is an alien concept in the initial years. However, people become aware of the crypto space with the popularity of bitcoin and blockchain technology. Initially, cryptocurrencies earned a bad name due to money laundering and fraud. As a consequence, the government of many countries banned the use of cryptocurrencies.
However, some countries came forward to legalize digital currencies by imposing different laws on their usage. Here you will find some important facts that you need to know about the use of cryptocurrencies in Germany.
Cryptocurrency Usage in Germany
Many retail inventors in Germany use BTC Supreme to invest in cryptocurrencies. However, it is important to know the following things before investing in cryptocurrencies.
- How the German Government View Cryptocurrencies
- Regulations for Use of Cryptocurrencies
- Tax Laws for Cryptocurrencies
- Licensing and Ownership
- Crypto Mining Regulations
If you want to invest, trade, or just know about the usage of cryptocurrencies in Germany, read on.
- How the German Government View Cryptocurrencies?
The perception and approach of the German government toward cryptocurrencies is a little confusing. In one way, the government is considering that investors can invest in cryptocurrencies. On the other hand, it does not consider cryptocurrencies either money or giving similar value as currencies. The government considers that cryptocurrencies are substitute currencies, not legal tender.
The government restricts the unlawful promotion of cryptocurrencies and warns the investors to review everything carefully. Again, the government put criticism about the term ICOs which is nowhere comparable to the term IPOs.
Although the German government views cryptocurrencies with so much skepticism, it has adopted the underlying technology. Cryptocurrency operates through blockchain technology, which can be referred to as a subset of distributed ledger technology (DLT). The government supports DLT and interested to make development in that field.
- Regulations for Cryptocurrencies
Understanding the regulation of cryptocurrencies can help you to decide how to use cryptocurrencies in Germany.
- There is no prohibition of issuance of cryptocurrencies in Germany.
- The mining of cryptocurrencies is also not prohibited.
- Holding and trading cryptocurrencies is also legal in general terms
However, legal restrictions are imposed on the usage of cryptocurrencies. Using cryptocurrencies while going shopping is not regulated. Th at means, making transactions with cryptocurrencies for shopping goods and services is not a regulated activity both for the buyer and seller. For any commercial purpose such as business transactions, or creating a trading exchange requires a license by the German financial law.
- Tax Laws for Cryptocurrencies
Cryptocurrency tax laws are a little complicated in German. The government imposes the VAT regime to collect tax for the usage of cryptocurrencies. You can understand them easily with the following.
- Exchanging fiat currencies or domestic currencies with digital currencies are exempted from VAT. This is also applicable for exchanging digital currency with domestic or fiat.
- Shopping with cryptocurrencies is not taxable.
- Cryptocurrency mining is also non-taxable.
- Providing digital wallets to the citizens is taxable.
- Offering a trading platform or crypto exchange is also taxable.
- Investing and trading are also taxable.
- Licensing and Ownership Requriment
You need a license for performing certain activities with cryptocurrencies in Germany. Here is the list of activities for which you need to obtain a license.
- If you want to manage a portfolio then you need a license.
- If you are providing broking services, you will need a license.
- You need a contract broking license for investment broking services.
- Cross Border Transactions
Many countries impose restrictions on importing cryptocurrencies from other countries. But there is no restriction in German for making cross-border transactions in cryptocurrencies.
From the above information, it is clear that using cryptocurrencies is not illegal in German. However, there are certain rules and regulations imposed on the usage of cryptocurrencies. As mentioned above, using cryptocurrencies for providing any services such as digital wallets, crypto trading platforms, or crypto exchanges, requires a license.
Additionally, the German government also imposes tax laws on the usage of cryptocurrencies. Moreover, it restricts the unlawful promotion of cryptocurrencies publicly and warns investors to be careful about their investment.
Hopefully, the above information has helped you to understand the usage of digital currencies in Germany. If you have any queries regarding the usage please comment below and please share your thoughts on this.