German VAT Ruling - On what exactly is VAT charged?

prophetx

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Quote from: davout on August 21, 2013, 03:37:42 PM

Quote from: prophetx on August 21, 2013, 02:41:05 PM

in the USA anyone exchanging BTC to any currency professionally or $1000+/day needs a licenses or licenses... if you have read enough posts in these forums you would know that also applies in EU countries.

Guess I probably missed the "Let's make up some laws, be creative!" thread in my few years here.

guess so...

jedunnigan

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People aren't looking at the big picture in here. This does in fact effect the 'little guy'. It effects everyone.

If you step back it appears as if Germany has just completely undermined the competitive advantage of Bitcoin. Even though small p2p transactions won't be taxed, anything done through an 'official' channel will be. Thus the costs to the broker/exchanger/whatever will be passed onto the little guy, which inevitably weighs heavily on the rest of the Bitcoin economy.

I would like some clarity on this issue too, because anyone considering opening a Bitcoin business in Germany or dealing with German customers must now seriously reconsider their options. Troublesome.

smolen

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Can someone give an idea what is situation with VAT refunds for exported bitcoins?
(IANAL, feel free to be harsh if it makes explanation more clear

)

davout

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Quote from: prophetx on August 21, 2013, 02:41:05 PM

in the USA anyone exchanging BTC to any currency professionally or $1000+/day needs a licenses or licenses... if you have read enough posts in these forums you would know that also applies in EU countries.

Guess I probably missed the "Let's make up some laws, be creative!" thread in my few years here.

prophetx

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Quote from: davout on August 21, 2013, 10:52:02 AM

Quote from: prophetx on August 21, 2013, 09:42:58 AM

Given that the german tax authority falls under the Ministry of Finance, and the MoF calls it private money, what would lead you to believe that a subordinate agency would attempt to redefine that?

“The German Ministry of Finance does not classify bitcoins as e-money or as a functional currency; they cannot be regarded as a foreign currency. Nevertheless they have to be subsumed under the German term of ‘Rechnungseinheit’ as a financial instrument,” Martin Chaudhuri from the Ministry of Finance

http://translate.google.com/#auto/en/Rechnungseinheit

My message did not refer to Germany, see the "" part.

Also, just because a minister says something does not make it a law, merely an interpretation. Maybe the next minister will say the opposite, who knows.
It is a guideline, not a law. In order to become law it has to go through the regular circuit.

I would remain cautious about the whole thing, because right now it's still quite blurry, nothing has been said about the licensing requirements for example, do people who exchange BTC for EUR professionnally or semi-professionnally need a financial license ? Because if you extrapolate the opinion you easily reach the conclusion that yes, to exchange financial instruments as a business you need a license. This sword has two edges.

There has been a ton of hype around this, but the taxman doesn't do hype he does law.
I concur that this is a great thing though, but I'm mildly impressed by this whole thing because once you remove the hype varnish there isn't that much left in terms of cold hard law.

It's a great start, but it's just a start.

in the USA anyone exchanging BTC to any currency professionally or $1000+/day needs a licenses or licenses... if you have read enough posts in these forums you would know that also applies in EU countries.

davout

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Quote from: prophetx on August 21, 2013, 09:42:58 AM

Given that the german tax authority falls under the Ministry of Finance, and the MoF calls it private money, what would lead you to believe that a subordinate agency would attempt to redefine that?

“The German Ministry of Finance does not classify bitcoins as e-money or as a functional currency; they cannot be regarded as a foreign currency. Nevertheless they have to be subsumed under the German term of ‘Rechnungseinheit’ as a financial instrument,” Martin Chaudhuri from the Ministry of Finance

http://translate.google.com/#auto/en/Rechnungseinheit

My message did not refer to Germany, see the "" part.

Also, just because a minister says something does not make it a law, merely an interpretation. Maybe the next minister will say the opposite, who knows.
It is a guideline, not a law. In order to become law it has to go through the regular circuit.

I would remain cautious about the whole thing, because right now it's still quite blurry, nothing has been said about the licensing requirements for example, do people who exchange BTC for EUR professionnally or semi-professionnally need a financial license ? Because if you extrapolate the opinion you easily reach the conclusion that yes, to exchange financial instruments as a business you need a license. This sword has two edges.

There has been a ton of hype around this, but the taxman doesn't do hype he does law.
I concur that this is a great thing though, but I'm mildly impressed by this whole thing because once you remove the hype varnish there isn't that much left in terms of cold hard law.

It's a great start, but it's just a start.

prophetx

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Quote from: davout on August 19, 2013, 06:00:46 PM

Quote from: oblongmeteor on August 19, 2013, 05:57:48 PM

That would be helpful if you find the time. I guess all of this is (sadly) conjecture until an official response is forthcoming from tax authority.

It's not conjecture, until Bitcoin gets a legal status you *have* to consider it to be a generic good/service.

Here's the write-up : https://bitcointalksearch.org/topic/m.880342

Given that the german tax authority falls under the Ministry of Finance, and the MoF calls it private money, what would lead you to believe that a subordinate agency would attempt to redefine that?

“The German Ministry of Finance does not classify bitcoins as e-money or as a functional currency; they cannot be regarded as a foreign currency. Nevertheless they have to be subsumed under the German term of ‘Rechnungseinheit’ as a financial instrument,” Martin Chaudhuri from the Ministry of Finance

http://translate.google.com/#auto/en/Rechnungseinheit

prophetx

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are you talking about exchanging bitcoins for other money? typically commercial paper, or i suppose what they are calling private money, which would seem to fall in that same category does not have a sales tax. Or at least I have never paid a sales tax on stocks, bonds or currency transactions.

now if you are talking about whether you charge VAT on real items and services, that would generally be a Yes unless you fall under any of the exceptions

Technomage

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From tax people we have official documents approving our main business model, but the discussion with financial regulators has been in email alone. Their interest seems so low that we don't feel like we need official papers from them at this point.

oblongmeteor

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Quote from: Technomage on August 19, 2013, 06:17:50 PM

I have a good contact over there and we have been communicating with email for a couple of years now. He did understand the issue, the authorities in Finland are simply not very interested in Bitcoin yet. Even the tax people have very little in terms of official guidance. But yes he did clearly tell me in an email that the ATM is not interesting to them. They don't see Bitcoin as money so they don't see the machine as an ATM, it's a vending machine. I was very surprised that the bitcoins in, euro out didn't concern him either, but it didn't. For now we're going for a euro in, bitcoins out machine (the Lamassu machine, which we've preordered).

The ATM, or vending machine, will use the same brokering model we've set up with the tax people. The bitcoins are bought at an exchange in real time and we never sell our own bitcoins.

As long as you've got an official response - not a customer service desk response, but an official response from the tax office (usually a written response that comes on headed paper with a reference number) - you'll be fine if anyone contests it.

It's worth remembering; when it comes to money the paper trail is very important.

Technomage

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Quote from: davout on August 19, 2013, 06:17:30 PM

If, as a company you sell something, the taxman doesn't care whether you actually collected VAT, it's irrelevant to his mission of collecting VAT on the money that came in by the means of sales.

If you do not charge VAT on a sale then it's a net loss for you, unless of course your margin is higher than the applicable VAT rate.

I need to check this out in detail. I find it a bit insane that VAT can be collected if it's technically impossible for the company to add VAT on the selling price when selling the product. This is obviously rarely the case for most situations but in this particular situation it does apply. I need to ask about this issue specifically, from the tax people.

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Quote from: davout on August 19, 2013, 06:12:07 PM

And if they said there is no need for regulation for you ATM thing that's extremely surprising, I suspect they didn't understand the question, because the money laundering implications of such a device are quite massive. "Oh hey, I can just come up with stashes of dirty cash money, and teleport it to Singapore". Do you have something in writing about this ? Do they actually have authority to exempt you of it ? I'd really recommend to be very very careful. Because they won't care until they start caring because they suddenly changed their minds...

I have a good contact over there and we have been communicating with email for a couple of years now. He did understand the issue, the authorities in Finland are simply not very interested in Bitcoin yet. Even the tax people have very little in terms of official guidance. But yes he did clearly tell me in an email that the ATM is not interesting to them. They don't see Bitcoin as money so they don't see the machine as an ATM, it's a vending machine. I was very surprised that the bitcoins in, euro out didn't concern him either, but it didn't. For now we're going for a euro in, bitcoins out machine (the Lamassu machine, which we've preordered).

The ATM, or vending machine, will use the same brokering model we've set up with the tax people. The bitcoins are bought at an exchange in real time and we never sell our own bitcoins.

davout

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Quote from: Technomage on August 19, 2013, 06:12:31 PM

I'm simply totally unaware of any situation where a company would pay VAT on something they sold if the buyer hasn't payed for the VAT in the first place. In this case it's often impossible for the sellers to add VAT so I can't see how the tax people could ask for it.

If, as a company you sell something, the taxman doesn't care whether you actually collected VAT, it's irrelevant to his mission of collecting VAT on the money that came in by the means of sales.

If you do not charge VAT on a sale then it's a net loss for you, unless of course your margin is higher than the applicable VAT rate.

Quote from: oblongmeteor on August 19, 2013, 06:13:51 PM

Quote from: davout on August 19, 2013, 06:05:54 PM

Quote from: oblongmeteor on August 19, 2013, 06:04:26 PM

Thanks alot. Although I would say it is up to each member state of the EU to interpret guidance issued from Brussels. Hence each tax authority can have a different outlook on the same assets, services or goods.

Are you implying that a normal tax authority could decide on its own to pass on the option of collecting more taxes ? :-)

Hahaha - only if we were in a fairytale I think Wink

But the classification of things like Bitcoin where there is no unifying guidance from Brussels are at the discretion of the member state. The same applies for things like VAT rates etc.

On a separate note, will you still be running out of Hong Kong when BTC-Central returns?

The thing you need to understand is that there is no such thing as "unclassified", if it not explicitly classified, then it is classified in the default shitty category of you-pay-vat-on-each-sale.

And no, we moved the money to France in June 2012 and got a proper financial license through a partnership in December, we'll still be operating legally from France when we reopen.

oblongmeteor

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Quote from: davout on August 19, 2013, 06:05:54 PM

Quote from: oblongmeteor on August 19, 2013, 06:04:26 PM

Thanks alot. Although I would say it is up to each member state of the EU to interpret guidance issued from Brussels. Hence each tax authority can have a different outlook on the same assets, services or goods.

Are you implying that a normal tax authority could decide on its own to pass on the option of collecting more taxes ? :-)

Hahaha - only if we were in a fairytale I think Wink

But the classification of things like Bitcoin where there is no unifying guidance from Brussels are at the discretion of the member state. The same applies for things like VAT rates etc.

On a separate note, will you still be running out of Hong Kong when BTC-Central returns?

Technomage

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I'm simply totally unaware of any situation where a company would pay VAT on something they sold if the buyer hasn't payed for the VAT in the first place. In this case it's often impossible for the seller to add VAT (if selling bitcoins on an exchange for example) so I can't see how the tax people could ask for it.

davout

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Quote from: Technomage on August 19, 2013, 06:05:11 PM

This is a non-issue in Finland. We have consulted the financial regulators in Finland about this and they don't care at all. They only see "euro in, euro out" scenarios as a money transfer business. Both "BTC in, EUR out" and "EUR in, BTC out" scenarios are, as far as they're concerned, uninteresting. We made an extra inquiry about the Bitcoin ATM's and they still do not care. We can freely setup a both ways ATM here with absolutely 0 regulatory issues, at least for now. We'll make do with a one-way Lamassu for now though.

If you're doing EUR in, BTC out then you're not proxying.
And if you combine EUR-in, BTC-out AND BTC-in, EUR-out that's equivalent from their PoV to EUR-in, EUR-out.

And if they said there is no need for regulation for you ATM thing that's extremely surprising, I suspect they didn't understand the question, because the money laundering implications of such a device are quite massive. "Oh hey, I can just come up with stashes of dirty cash money, and teleport it to Singapore". Do you have something in writing about this ? Do they actually have authority to exempt you of it ? I'd really recommend to be very very careful. Because they won't care until they start caring because they suddenly changed their minds...

Technomage

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Quote from: davout on August 19, 2013, 06:03:19 PM

Nope, you're wrong, you always have the option to sell them to another company, no need to remind you how VAT works, and how companies don't care about being sold stuff with or without VAT if they can afford to front it up :-)

The big problem I have with the VAT issue is that VAT is always, 100% of the time, payed by the buyer. It's a tax that the buyer pays. Then the seller simply forwards that money the tax people at some point, or deducts it using VAT the company payed itself while purchasing something. If I sell bitcoins as a company on an exchange, there is no way for me to make the buyer pay VAT on that sale. That, I think, is something to think about.

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Quote from: oblongmeteor on August 19, 2013, 06:04:26 PM

Thanks alot. Although I would say it is up to each member state of the EU to interpret guidance issued from Brussels. Hence each tax authority can have a different outlook on the same assets, services or goods.

Are you implying that a normal tax authority could decide on its own to pass on the option of collecting more taxes ? :-)

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Quote from: davout on August 19, 2013, 05:55:26 PM

That is correct, but you're opening yet another can of worms, as "proxying money" is something that is heavily regulated and requires a financial license.

This is a non-issue in Finland. We have consulted the financial regulators in Finland about this and they don't care at all. They only see "euro in, euro out" scenarios as a money transfer business. Both "BTC in, EUR out" and "EUR in, BTC out" scenarios are, as far as they're concerned, uninteresting. We made an extra inquiry about the Bitcoin ATM's and they still do not care. We can freely setup a both ways ATM here with absolutely 0 regulatory issues, at least for now. We'll make do with a one-way Lamassu for now though.

oblongmeteor

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Quote from: davout on August 19, 2013, 06:00:46 PM

It's not conjecture, until Bitcoin gets a legal status you *have* to consider it to be a generic good/service.

Here's the write-up : https://bitcointalksearch.org/topic/m.880342

Thanks alot. Although I would say it is up to each member state of the EU to interpret guidance issued from Brussels. Hence each tax authority can have a different outlook on the same assets, services or goods.

davout

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Quote from: Technomage on August 19, 2013, 05:59:26 PM

The only other option would be to never sell the coins, because VAT would prohibit selling them profitably.

Nope, you're wrong, you always have the option to sell them to another company, no need to remind you how VAT works, and how companies don't care about being sold stuff with or without VAT if they can afford to front it up :-)

Quote from: oblongmeteor on August 19, 2013, 06:00:51 PM

Agreed. I don't know your exact circumstances or how ruthless your tax authority is, but if it's anything like the ones in the UK or in Germany, I'd be certain to seek legal clarification before you have to file any accounts... things can get very nasty very quickly, even in Finland I imagine.

It's something that all tax authorities have in common.

Quote from: Technomage on August 19, 2013, 06:02:24 PM

So you're saying that your company pays VAT on the full value for all company bitcoins sold? Or does your company even hold bitcoins?

When we sold bitcoins through instawire.org we did. Other than that we don't sell them. But we do pay VAT on fees collected in BTC in exchange fees.

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Quote from: davout on August 19, 2013, 05:57:15 PM

If you are a company you are a professionnal, the position you're taking is *extremely* risky.

So you're saying that your company pays VAT on the full value for all company bitcoins sold? Or does your company even hold bitcoins?

oblongmeteor

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Quote from: davout on August 19, 2013, 05:57:15 PM

Quote from: Technomage on August 19, 2013, 05:47:17 PM

Our company is way over any limits but we don't sell bitcoins professionally so we can argue that it's not professional activity.

If you are a company you are a professionnal, the position you're taking is *extremely* risky.

Agreed. I don't know your exact circumstances or how ruthless your tax authority is, but if it's anything like the ones in the UK or in Germany, I'd be certain to seek legal clarification before you have to file any accounts... things can get very nasty very quickly, even in Finland I imagine.

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Quote from: oblongmeteor on August 19, 2013, 05:57:48 PM

That would be helpful if you find the time. I guess all of this is (sadly) conjecture until an official response is forthcoming from tax authority.

It's not conjecture, until Bitcoin gets a legal status you *have* to consider it to be a generic good/service.

Here's the write-up : https://bitcointalksearch.org/topic/m.880342

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Quote from: oblongmeteor on August 19, 2013, 05:52:47 PM

Now that is interesting. If I'm understanding it correctly; you could possibly work around the issue by providing brokerage services, and therefore you may only be due VAT (if any VAT was even applicable) on your service fee. For example; instead of buying Bitcoins and then reselling them (ala the traders on bitbargain, localbitcoins etc), if you were to effectively proxy-purchase from an exchange with your 'service markup' - you would not be liable. You could even route BTC purchased on behalf of your client directly from an exchange to your client and therefore you would be entirely out of reach of VAT since you never actually held the Bitcoins... or am I talking nonsense

?

We can provide the platform for buying and selling bitcoins that way without a VAT issue. That's exactly the same thing as real exchanges do it, our system is just sort of a dark pool manual exchange where we match our own customers and trade the rest on the exchanges, on behalf of our customers. In this scenario the brokering fee will include VAT and otherwise we need to have nothing to do with VAT. This has been confirmed by the tax administration.

When we sell our own bitcoins, it becomes a different story. In these cases we are simply selling them, paying capital tax if necessary, and hoping for the best. I don't see how any company that owns bitcoins could do any differently. The only other option would be to never sell the coins, because VAT would prohibit selling them profitably.

oblongmeteor

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Quote from: davout on August 19, 2013, 05:55:26 PM

Quote from: oblongmeteor on August 19, 2013, 05:52:47 PM

Now that is interesting. If I'm understanding it correctly; you could possibly work around the issue by providing brokerage services, and therefore you may only be due VAT (if any VAT was even applicable) on your service fee. For example; instead of buying Bitcoins and then reselling them (ala the traders on bitbargain, localbitcoins etc), if you were to effectively proxy-purchase from an exchange with your 'service markup' - you would not be liable. You could even route BTC purchased on behalf of your client directly from an exchange to your client and therefore you would be entirely out of reach of VAT since you never actually held the Bitcoins... or am I talking nonsense

?

That is correct, but you're opening yet another can of worms, as "proxying money" is something that is heavily regulated and requires a financial license.

I made a complete write-up in these forums a year or two ago on the state of these questions in Europe, maybe I'll find some motivation at some point to go fish it up.

That would be helpful if you find the time. I guess all of this is (sadly) conjecture until an official response is forthcoming from tax authority.

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Quote from: Technomage on August 19, 2013, 05:47:17 PM

Our company is way over any limits but we don't sell bitcoins professionally so we can argue that it's not professional activity.

If you are a company you are a professionnal, the position you're taking is *extremely* risky.

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Quote from: oblongmeteor on August 19, 2013, 05:52:47 PM

Now that is interesting. If I'm understanding it correctly; you could possibly work around the issue by providing brokerage services, and therefore you may only be due VAT (if any VAT was even applicable) on your service fee. For example; instead of buying Bitcoins and then reselling them (ala the traders on bitbargain, localbitcoins etc), if you were to effectively proxy-purchase from an exchange with your 'service markup' - you would not be liable. You could even route BTC purchased on behalf of your client directly from an exchange to your client and therefore you would be entirely out of reach of VAT since you never actually held the Bitcoins... or am I talking nonsense

?

That is correct, but you're opening yet another can of worms, as "proxying money" is something that is heavily regulated and requires a financial license.

I made a complete write-up in these forums a year or two ago on the state of these questions in Europe, maybe I'll find some motivation at some point to go fish it up.

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Quote from: Technomage on August 19, 2013, 05:40:25 PM

so we know if we're talking of a real or a purely theoretical issue.

It'll become a real issue as soon as it starts actually mattering. If you're small time nobody cares, if you start getting big time you won't find an accountant to sign on your stuff.

Quote from: Technomage on August 19, 2013, 05:42:40 PM

For individuals it doesn't matter that much.

Until it starts to matter.

If you're doing business seriously you need to consider all foreseeable risks, and that is one of them.
Because just because you didn't get in trouble today doesn't mean the taxman won't come tomorrow knock on your door and bash your company to nothingness.

Quote from: oblongmeteor on August 19, 2013, 05:43:38 PM

This raises the question; what's the threshold for being considered a 'professional' seller within Finland?

That would be specified in the law, in France for example it's around 50kEUR/year which is not much.

Quote from: oblongmeteor on August 19, 2013, 05:43:38 PM

In addition, at least in Finland, you seem to be indicating that the current rules preclude any business that actually buys and sells Bitcoins in the same way as Foreign Exchange dealers such as 1st Contact Forex, Transferwise etc do for currency exchanges.

You do not reason with the taxman by using common sense, you use laws.

Quote from: oblongmeteor on August 19, 2013, 05:43:38 PM

To ~~casual~~ an extremely paranoid observer it might seem that these punitive taxes are being applied to seriously stunt the spread of Bitcoin to the mainstream.

FTFY

There actually is one correct and sensible way to handle this situation, it is to use the procedure that is present in France (and I assume every civilized country), to ask the tax administration for a formal and binding opinion on a very specific question. In France it's called a "rescrit fiscal" where you ask the taxman to clarify something and take a position. That's where you need to word the question extremely carefully :-)

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Quote from: Technomage on August 19, 2013, 05:47:17 PM

The limit for no VAT is 8500 € and for discount VAT it is 22500 €. Our company is way over any limits but we don't sell bitcoins professionally at all so we can argue that it's not professional activity. We don't trade or do arbitrage professionally, but we might sell our Bitcoin investments and then we pay capital tax if we made a profit. That's a sensible way to do it and we are simply forced to trust that a sensible approach will work.

For our brokering exchange we do pay VAT but that is included in the brokering fee. It has nothing to do with bitcoins, it's a service fee.

Now that is interesting. If I'm understanding it correctly; you could possibly work around the issue by providing brokerage services, and therefore you may only be due VAT (if any VAT was even applicable) on your service fee. For example; instead of buying Bitcoins and then reselling them (ala the traders on bitbargain, localbitcoins etc), if you were to effectively proxy-purchase from an exchange with your 'service markup' - you would not be liable. You could even route BTC purchased on behalf of your client directly from an exchange to your client and therefore you would be entirely out of reach of VAT since you never actually held the Bitcoins... or am I talking nonsense

?

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Quote from: oblongmeteor on August 19, 2013, 05:43:38 PM

This raises the question; what's the threshold for being considered a 'professional' seller within Finland? In addition, at least in Finland, you seem to be indicating that the current rules preclude any business that actually buys and sells Bitcoins in the same way as Foreign Exchange dealers such as 1st Contact Forex, Transferwise etc do for currency exchanges.

To casual observer it might seem that these punitive taxes are being applied to seriously stunt the spread of Bitcoin to the mainstream.

The limit for no VAT is 8500 € in sales and for discount VAT it is 22500 € in sales. Our company is way over any limits but we don't sell bitcoins professionally so we can argue that it's not professional activity. We don't trade or do arbitrage professionally, but we might sell our Bitcoin investments occasionally and then we pay capital tax if we made a profit. That's a sensible way to do it and we are simply forced to trust that a sensible approach will work.

For our Bitcoin brokering service we do pay VAT but that is included in the brokering fee. It has nothing to do with Bitcoin taxes, it's a service fee and you add VAT on all services.

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Quote from: Technomage on August 19, 2013, 05:36:58 PM

Remember that VAT, at least in Finland, does not apply at all when the activity is considered small time. Only professional selling applies to VAT at all. Exchanges themselves only broker bitcoins so they don't have to add anything to the full value.

This raises the question; what's the threshold for being considered a 'professional' seller within Finland? In addition, at least in Finland, you seem to be indicating that the current rules preclude any business that actually buys and sells Bitcoins in the same way as Foreign Exchange dealers such as 1st Contact Forex, Transferwise etc do for currency exchanges.

To casual observer it might seem that these punitive taxes are being applied to seriously stunt the spread of Bitcoin to the mainstream.

Technomage

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That whole VAT thing can be a showstopper if it is strongly enforced. At least for companies. For individuals it doesn't matter that much.

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Quote from: davout on August 19, 2013, 05:36:17 PM

But if you dig just a little deeper you'll find the situation to be even shittier, since a corporation, selling coins through an exchange would, in theory, be required to pay VAT to the state for the sales.

I know. Our company is basically ignoring this particular issue. We only pay the capital tax, which is the only tax that makes sense for bitcoins. We are prepared to go to court to argue the ridiculousness of Bitcoin VAT if necessary though.

Do you pay VAT on top of the full value? Does anyone? I don't know of anyone who does that, or has gotten into trouble for not doing that. I'd like to see some examples if there are any, though, so we know if we're talking of a real or a purely theoretical issue.

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Quote from: oblongmeteor on August 19, 2013, 05:35:25 PM

Where exactly do you draw your conclusions from that VAT is charged on the difference rather than the face value?

He just took that back, when SMF tells you in red that a reply was posted while you were typing it's for a good reason ;-)

Quote from: Technomage on August 19, 2013, 05:36:58 PM

Remember that VAT, at least in Finland, does not apply at all when the activity is considered small time. Only professional selling applies to VAT at all. Exchanges themselves only broker bitcoins so they don't have to add anything to the full value.

Same here. You get VAT exemptions under certain thresholds, but these conditions make building a business around selling coins infeasible in practice.

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Remember that VAT, at least in Finland, does not apply at all when the activity is considered small time. Only professional selling applies to VAT at all. Exchanges themselves only broker bitcoins so they don't have to add anything to the full value.

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Quote from: Technomage on August 19, 2013, 05:33:14 PM

Exchanges are not affected because they don't sell their own coins

But if you dig just a little deeper you'll find the situation to be even shittier, since a corporation, selling coins through an exchange would, in theory, be required to pay VAT to the state for the sales.

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Quote from: Technomage on August 19, 2013, 05:22:23 PM

So the VAT does not apply to the full face value in theory or practice in Germany. This should be certain now. VAT only applies to service fees if you do brokering or something like that, but is never applied to full face value.

Where exactly do you draw your conclusions from that VAT is charged on the difference rather than the face value? I'm not saying your wrong, it would just be nice for some official statement to this effect. Looking at the articles on the internet that have been covering this (E.g. http://techcrunch.com/2013/08/19/germany-recognizes-bitcoin-as-private-money-sales-tax-coming-soon/) the implication is that VAT is charged on the full face value when the Bitcoin is sold to an 'end user'.

Lumbering a 19% surcharge on top of any BTC sale face value to non-business entities is entirely ludicrous, but then that might have been the point.

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Quote from: davout on August 19, 2013, 05:30:14 PM

Stocks and gold are not monetary instruments. Financial instruments maybe, monetary instruments I don't think so.
If there hasn't been anything specifically said about VAT I would be extremely cautious, the tax administration might have a very different interpretation of what we both think is common sense.

You may have been right, I take my words back. Based on another thread on the forum it seems that Bitcoin, at least for now, is not VAT exempt in Germany. Everything has VAT that isn't explicitly VAT exempt, so it seems that the situation is still crap.

Personally I don't see the VAT issue as especially bad as it only affects professional traders. Exchanges are not affected because they don't sell their own coins, and small time traders aren't either since it's not professional. But I would really like to see Bitcoin treated as money in VAT sense if it is otherwise declared as money. Money never has VAT since it makes no sense to have VAT on a medium of exchange.

Declaring Bitcoin more like money will also increase regulation related stuff around Bitcoin. The least they could do is make it VAT exempt to give us something good.

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Quote from: Technomage on August 19, 2013, 05:27:37 PM

Let me answer that in short: you're wrong here. Bitcoin is classified as a monetary instrument in Germany, exactly in the same category as gold and stocks. Capital tax was the focus in these announcements though. I agree that there has not been a statement specifically on VAT but I see no reason to assume that VAT would be handled any differently, it would be ridiculous.

Stocks and gold are not monetary instruments. Financial instruments maybe, monetary instruments I don't think so.
If there hasn't been anything specifically said about VAT I would be extremely cautious, the tax administration might have a very different interpretation of what we both think is common sense.

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Quote from: davout on August 19, 2013, 05:25:02 PM

Where did you hear that the VAT issue was solved in Germany ?
Where did you hear it was categorized in the same way as gold ?

Maybe I'm wrong here but I don't think that it was part of the whole Germany-recognizes-Bitcoin-as-private-currency thing.

Let me answer that in short: you're wrong here. Bitcoin is classified as a monetary instrument in Germany, exactly in the same category as gold and stocks. Capital tax was the focus in these announcements though. I agree that there has not been a statement specifically on VAT but I see no reason to assume that VAT would be handled any differently, it would be ridiculous.

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Quote from: Technomage on August 19, 2013, 05:22:23 PM

The VAT issue has been problematic in the past, but it certainly isn't in Germany anymore. Bitcoin is categorized in the same category as gold and stocks which do NOT have anything to do with VAT (anywhere, pretty much) so the question is pretty much solved. As for how it works in other VAT countries, that is a different story.

Where did you hear that the VAT issue was solved in Germany ?
Where did you hear it was categorized in the same way as gold ?

Maybe I'm wrong here but I don't think that it was part of the whole Germany-recognizes-Bitcoin-as-private-currency thing.

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The VAT issue has been problematic in the past, but it certainly isn't in Germany anymore. Bitcoin is categorized in the same category as gold and stocks which do NOT have anything to do with VAT (anywhere, pretty much) so the problem has been solved. As for how it works in other VAT countries, that is a different story.

So the VAT does not apply to the full face value in theory or practice in Germany. This should be certain now. VAT only applies to service fees if you do brokering or something like that, but is never applied to full face value. That is the great advantage of Bitcoin being money. Money, moneylike instruments and gold never have VAT anywhere in any situation.

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This is a very important question that smart people have been asking themselves for a couple of years now.

Theoretically the VAT applies to the full face value.

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I'm still slightly unclear on exactly where VAT is applied in respect to Bitcoin purchases within Germany. To copy an unanswered question from: http://www.reddit.com/r/Bitcoin/comments/1koasj/germanys_ruling_on_bitcoin_paves_the_way_for_its/ :

Are you applying it to the full face value of the Bitcoin you purchased, or just the profit that resulted? For example; I buy a Bitcoin for 100 EUR and I sell it for 105 EUR. Should I have actually sold my 1 Bitcoin for 124.95 EUR (105 EUR + 19% VAT) or do I sell it for 105 EUR but then give the German government 0.95 EUR (19% of 5 EUR)?

The question is interesting because intrinsically, Bitcoin has no worth other than that which 'the market' attributes it. So, charging VAT on the face value would be akin to charging you 19% more to purchase a gift voucher that you only redeem for the face value. You wouldn't pay 120 EUR for a 100 EUR iTunes voucher, so... where does the VAT apply?

Topic: German VAT Ruling - On what exactly is VAT charged? (Read 6336 times)