Everything about the precedent at the Federal Fiscal Court

It is a novelty in Munich. For the first time in its history, the Federal Fiscal Court, the highest financial court in Germany, has to comment on the taxation of cryptocurrencies. Basically, the question is whether Bitcoin and Co. are considered economic goods at all and are therefore relevant under tax law. The decision could have far-reaching consequences for crypto investors.

This was preceded by a lawsuit filed by a bitcoin investor who, almost a year ago, reclaimed taxes from a crypto trade from the tax office. Bitcoin is not an economic good, he argues. The competent finance court in Cologne dismissed the lawsuit, and the investor then went before the BFH. A total of 3.4 million euros is at stake.

“Judgment in a few weeks”

Hendrik Arendt and Martin Friedberg from the commercial law firm CMS and Werner Hoffmann, managing director of the tax reporting company Pekuna, followed the first day of the trial live. At the beginning, the statements of the plaintiff and the tax authority of North Rhine-Westphalia were read out. A representative of the Ministry of Finance was also given the opportunity to make a statement. “The judges have not yet given a clear direction,” Hoffmann explains to BTC-ECHO. However, the questions asked would have raised significantly more doubts about the plaintiff’s version, the tax expert continued.

I am surprised that there will not be another day of trial and that the next step is the announcement of the verdict. That could happen in just a few weeks.

Werner Hoffmann, Managing Director of Pekuna

However, the legal experts at the commercial law firm CMS are not expecting any major surprises. Arendt and Friedberg say to BTC-ECHO:

We expect that the BFH will subsume crypto values ​​under the concept of economic goods and that sales processes will therefore be taxable

Hendrik Arendt and Martin Friedberg, commercial law firm CMS

Should the BFH actually reject the revision, the taxation of crypto trading will then be certain at the latest. This would also result in consequences for investors, say the lawyers. Investors who have not yet declared any income should act by then at the latest. But first you have to wait for the final verdict, adds Hoffmann.

Ministry of Finance defines cryptocurrencies as economic goods

The case has been running since March 2021. At that time, the taxation of profits from the sale of crypto assets had not been finally clarified by the tax authorities or the tax courts.

That changed in May 2021. In a letter, the Federal Ministry of Finance (BMF) instructed the tax offices to register cryptocurrencies for tax purposes. Bitcoin and Co. were clearly defined as economic goods. This makes the classification into German income tax law possible in the first place. However, it remains to be seen whether the BMF’s instruction will have an impact on the current process. The Federal Fiscal Court is not bound by the decisions of the Federal Ministry of Finance and may deviate from the supreme tax authority in its decision.

Unsure about your own tax return?

So-called crypto tax tools can help. Investors can link their accounts to the tax software and then get a comprehensive view of all transactions and holdings. We have summarized for you which programs are available, what they can do and cost in particular.

You can get more information in the BTC-ECHO review section on crypto control tools