Germany: Bitcoin Is "Private Money"

hypnosec writes "Germany has declared Bitcoin as a 'unit of account', which makes the virtual currency a kind of 'private money' and the process of Bitcoin mining has been deemed 'private money creation.' The recognition as 'unit of account' makes Bitcoin eligible for use in "multilateral clearing circles" and because of this citizens are liable to pay capital gains tax, if they profit from the crypto-currency by sale or purchase within a period of one year – the same as they would have to in case they profit by selling stock, bonds or other form of security. The question here is how the finance ministry would come to know of a person's Bitcoin holding as it is a decentralized currency with no governing body to keep count on the number of Bitcoins a person has. The German government expects that citizens declare their Bitcoin while filing their annual tax return."

Comments

Re:Same as any other potential fraud.

[fuzzyfuzzyfungus]

Honor system, but if you do anything to get on their shitlist they'll eventually find it out when you try and get it converted into salable assets.

And bitcoin's design matchess the 'well, we don't really have any way of knowing; but you are in serious trouble if we find out' enforcement model pretty well. Watching the block chain is already a thing in suitably interested hobbyist circles, and doing so doesn't require any blackhat wizard-fu, it's a protocol feature. For the moment, the transaction history is also relatively small.

None of that helps them connect a person to one or more wallet addresses; but if they do, by other means (probably if you try to cash out, possibly by surveillance of improperly anonymized use), they get a full transaction history automatically.

Re:Same as any other potential fraud.

[Jeremi]

Yes, you do... as long as you aren't harming others in the process.

Where it gets sticky is in the definition of what constitutes "harming others". For example, some argue that self-abuse (e.g. chronic drug use, or suicide) counts as harming others, in that by removing yourself from society, the other people in the society lose the benefits of your productivity/friendship/support/expertise/etc.