

Bitcoin now 'unit of account' in Germany - mysterywhiteboy
http://www.theguardian.com/technology/2013/aug/19/bitcoin-unit-of-account-germany

======
cs702
Germany is acting very logically in response to Bitcoin. Their thinking: "if a
growing number of people are using it as a store of value or medium of
exchange, or as a vehicle for financial speculation, let's regulate and tax
its use."

This bodes well for Bitcoin, because other countries are likely to follow
Germany's example.

~~~
walden42
> However, companies wanting to use it for commercial transactions would need
> permission from the Federal Financial Supervision Authority.

That's not a good thing for bitcoin, though, or for the free market in
general. One of the main ideas behind bitcoin is its ease of use compared to
exisiting methods. The more regulations and limitations imposed on it, the
more it becomes like everything else, in terms of ease of use.

~~~
VMG
It would be a bad thing if Bitcoin could be controlled that way. Luckily, the
government cannot influence bitcoin transactions.

~~~
PeterisP
There is no need to influence transactions technically, it's just clarifying
existing law - when doing/receiving Bitcoin transactions, you follow the same
rules [or else].

No matter if your income is in Euro, Yen, gold, goats, casino chips,
redeemable in-game credits, gems, Bitcoin or anything that may ever be
invented - that income is taxable.

If you are offering to hold deposits of value for public, or value transfers
to third parties - no matter if that is in Euro, Yen, gold, goats, casino
chips, redeemable in-game credits, gems, Bitcoin - you need to follow the
financial service regulations.

The only way to avoid that is if (while) your "new money" is useless as money,
i.e., you can't buy stuff with it.

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gioele
Bitcoin fulfils easily the definition of "electronic money" found in the
European directive 2009/110/EC, art. 2 def. 1:

> 2\. "electronic money" means electronically, including magnetically, stored
> monetary value as represented by a claim on the issuer which is issued on
> receipt of funds for the purpose of making payment transactions as defined
> in point 5 of Article 4 of Directive 2007/64/EC, and which is accepted by a
> natural or legal person other than the electronic money issuer;

Germany is doing nothing strange, all the EU state will have to do similar
things in the future. Bitcoin may be a distributed currency without a
politically backed central bank, but it is still a currency, so it is treated
as such by any competent tax office.

~~~
justincormack
I don't see that it represents a "claim on the issuer" though. Although you
could claim it as issued by the entropy of the universe in a double entry
system...

~~~
gioele
issuer = miner

You bitcoins are accepted because they are recognized by others to be part of
a block originally mined by someone.

Really not that different from how money is "printed" by central banks these
days (somebody presses the "generate €1.000.000" key and that updates a value
in a DB).

~~~
justincormack
Its not a liability of the miner though. I agree it is not much different from
money printing, but there is still a balancing entry, so money is a liability
of the central bank, although that is meaningless.

------
benmmurphy
that seems weird that germany has to recognize bitcoin as a unit of account to
collect taxes on it. surely, if you buy something and then later sell it in
the future for a profit you are liable for capital gains on it. surely there
is not some massive whitelist of all the goods that attract capital gains tax.

~~~
perlgeek
There are extra taxes for trading with currencies in Germany (and other
countries, it seems; google "forex tax"). So without it being recognized as a
currency, you still have to pay VAT, but not forex tax.

~~~
effn
VAT is never charged on assets (which Bitcoin is), only goods and services.

~~~
TomGullen
Here in the UK Bitcoins are treated as an electronic service. This means once
you're registered for VAT (and you must past ~£70k revenue) you have to charge
VAT on sales to:

\- Anyone in the UK

\- Individuals in the EU

And:

\- Reverse charge VAT to business in the EU

Having to charge VAT on Bitcoins is a show stopper if you're intending to sell
them unless you close your doors to EU customers.

Bitcoins need to be classed as VAT exempt, or small business in the UK trying
to get into Bitcoin will always struggle to grow.

~~~
celticninja
No they are not.

There is no official stance on bitcoin by the UK government, or tax
authorities. VAT is not chargeable on bitcoin transactions. There was one gy
who was advised by his accontants that he should be charging VAT but that was
not a legal requirement, more his accoutnants taking a very risk averse
position, that way if VAT was ever brought in on bitcoin he would not get an
unexpected VAT bill.

There are There are also some goods and services that are 2 types of
'exemption' to VAT:

* exempt - so no VAT is charged on them

* outside the scope of the UK VAT system altogether

Bitcoin is outside the scope of VAT entirely and it would require the tax
man/govt making a declaration on bitcoin as to how it is treated under VAT
rules. This has not happened, therefore VAT is not applicable to bitcoin.

------
derefr
I wonder how Germany expects to be able to tax this? It's very hard to audit
someone's collection of BTC wallets. Will this only be to require companies to
collect VAT for BTC transactions, or will it also include, say, income tax
when you're being paid in BTC?

~~~
agilebyte
A company pays for work done in BTC. They want to put that into their books as
an expense to reduce their tax burden. The other party that did the work is
now _on record_ and can be taxed also.

~~~
PeterisP
And it is taxed even if it's off record; not declaring the income and
successfully keeping it off record doesn't mean "not taxable", it means "tax
fraud".

If you manage to hide that income for some time but it comes to light a few
years later - BAM, you owe the back taxes in triple+interest.

------
alexro
It sounds more like a psychological achievement than legal. German government
has no means to control BTC, that means BTC is still in the wild.

This is good for the moment, but also begs a question: when the real
regulation comes into play how it will be played? But for now - relax and
enjoy!

~~~
betterunix
No means to control Bitcoin? As long as the German government is able to
enforce its tax code it can control Bitcoin. Governments have been collecting
taxes on things that are much harder to track than Bitcoin for much longer
than Bitcoin has existed.

~~~
alexro
No way for now, still not clear how they gonna assign monetary value to BTC,
what exchange rate they will use?

~~~
PeterisP
Come on - that's not an obstacle. First, it's _YOUR_ duty to report the income
and the appropriate local currency value of that income, so picking a rate is
your problem, not theirs.

And then, if they don't like your choice rate, then they pick a rate
themselves, tax you on that, and fine you for misrepresenting your income.

Afterwards you (and everyone else) begs them to publish some guidelines on
what rate should be used, they do so, and everyone is [mostly] happy.

------
kaonashi
So Bitcoins aren't a get-out-of-taxes-free card. Isn't that it's primary
practical draw? What volume of Bitcoin transactions involve black-market
activity?

~~~
oleganza
Bitcoin have different facets. For people leaving in places with a variety of
banking choice, some of them may come unnoticed.

Bitcoin is great when:

1\. You want to accept or make payments from a country where CC fraud is high
or banking is rare/expensive.

2\. You worry about high inflation rates in your home currency, and your
government creates a lot of obstacles to move your money to other currencies
(like today in Argentina).

3\. Or you want transact in a grey market tax-free. E.g. a guy selling his IT
consulting services.

