The German Federal Ministry of Finance last month clarified that it would not tax cryptocurrencies when they are used for payment purposes, ETHNews reported.

In a tax guidance published on February 27, the ministry noted the European Court of Justice’s (ECJ) 2015 ruling in which it had stated that bitcoin transactions should be exempt from VAT (value added tax). It said that cryptocurrencies such as bitcoin will receive the same tax treatment as legal tender when used for making payments.

“Virtual currencies (cryptocurrencies, e.g., Bitcoin) become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted and no other purpose serve as a means of payment,” the ministry explained (as translated by ETHNews).

When the payment is made using cryptocurrencies, the tax calculation will be based on the equivalent fiat exchange rate at the point of sale, reported by the vendor and according to the EU's VAT Directive. Furthermore, tax may also be imposed on the fees collected by cryptocurrency wallet providers.

However, the ministry said that the services of cryptocurrency miners are non-taxable. Similarly, intermediaries offering cryptocurrency to fiat conversions or vice-versa are beyond the scope of taxation as according to the EU ruling such conversions are tax exempt.

Regarding trading platforms, the ministry clarified that if the operators of exchanges purchase or sell cryptocurrencies as intermediary in their own name, they would be tax exempt. However, such exchanges that facilitate a marketplace would be taxed.