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Germany: Bitcoin Is "Private Money"

Posted by samzenpus on from the real-cash dept.

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."

9 of 223 comments (clear)

  1. Same as any other potential fraud. by Anonymous Coward · · Score: 5, Insightful

    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.

    Undocumented income may be frowned upon, but UNDECLARED income is worse if you get caught.

    Remember Al Capone after all :)

    1. Re:Same as any other potential fraud. by Sarten-X · · Score: 4, Insightful

      Exactly.

      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."

      ...just like cash.

      --
      You do not have a moral or legal right to do absolutely anything you want.
    2. Re:Same as any other potential fraud. by felixrising · · Score: 5, Insightful

      Most taxation systems are self reporting. You can lie but if you get caught any profits from your deception rapidly evaporate.

    3. Re:Same as any other potential fraud. by fuzzyfuzzyfungus · · Score: 4, Interesting

      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.

    4. Re:Same as any other potential fraud. by Jeremi · · Score: 4, Interesting

      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.

      --


      I don't care if it's 90,000 hectares. That lake was not my doing.
    5. Re:Same as any other potential fraud. by jcr · · Score: 4, Insightful

      Yes, some people argue that, and they're wrong. It's like claiming that a slave who runs away is harming his owner.

      -jcr

      --
      The only title of honor that a tyrant can grant is "Enemy of the State."
  2. Re:I'm out. Thank God by AHuxley · · Score: 5, Informative

    Re: Yeah I hate how much influence the IRS has in Germany these days.
    http://www.dispatch.com/content/stories/national_world/2013/07/06/Germany-strikes-deal-to-help-U-S-catch-tax-evaders.html
    It could be same hold as the IRS has over the Swiss banks?
    http://finance.fortune.cnn.com/2013/05/30/swiss-bank-accounts-irs/
    http://www.forbes.com/sites/robertwood/2013/07/09/swiss-banks-reveal-americans-u-k-deal-sputters-and-germany-embraces-fatca/

    --
    Domestic spying is now "Benign Information Gathering"
  3. Re:Law too slow to adap to technology? by Jane+Q.+Public · · Score: 4, Insightful

    "we can all see how slow they are achieveing anything at all. We can see this clearly with patents, copyrights, sexting and any other number of subjects."

    Not even. Not in regard to patents and copyrights, at any rate.

    The government hasn't been "moving slowly" at all. It was changes made by the government within the last 2 decades that have CAUSED the problems. Both patents and copyrights worked just fine prior to that.

    (No doubt some people would argue with me about the "fine" part, but it's pretty easy to demonstrate that they worked BETTER than they do now, under the current, changed laws.)

  4. Just not useful or safe by sjbe · · Score: 4, Insightful

    Bitcoin could have been a useful petty cash system for the Internet.

    Not really. Despite the claims of proponents, bitcoin provides little tangible benefit over existing currencies in almost all circumstances. Bitcoin scratches an ideological itch for some geeks who have a poor grasp of economics and a worse grasp of risk. Bitcoin only is cheaper to use than existing currencies if you ignore the externalities, opportunity cost and financial risk. Outside of a few rare corner cases people have virtually nothing to gain by using bitcoin and stand to lose quite a lot. Bitcoin is at best an interesting (though flawed) academic exercise.