Crypto tax advisor for companies: Dealing with corporate crypto assets on the web3

However, the tax treatment of crypto assets in companies is a complex challenge that requires specialized expertise.

Relevant questions in this context include, for example

• Financial accounting with cryptocurrencies
• Value added tax for blockchain-based business models
• Legal and tax implications of NFT projects in the context of an ICO
• Smart contracts
• Importance of KYC processes
• Tax treatment of cryptocurrencies in other countries

Our firm offers comprehensive crypto tax advice to ensure that your business complies with all relevant tax and regulatory requirements.

Blockchain technology for new business models

Blockchain technologies offer companies enormous potential for the development of new business models and the expansion of existing services and products. The underlying distributed ledger technology offers many advantages thanks to its transparency and traceability. All activities of all partners involved in the value chain can be precisely tracked and verified.

Some examples of blockchain-based business models:

• Validation of transactions through staking pools
• Loan structuring in the crypto environment
• Creation and trading of NFTs, e.g. in the art market
• factoring
• Use of NFTs as a marketing tool
• Using the metaverse as a new space to present products and services in an immersive environment

Despite the many opportunities that blockchain business models offer, companies need to consider the regulatory issues and tax regulations that the respective blockchain business models entail.

Current status of crypto laws in Germany and the EU

In Germany, there have so far been no legal adjustments to the taxation of cryptocurrencies, NFTs and other digital assets. Although the Ministry of Finance has issued some guidelines, these only deal with the issues in a rudimentary way. The lack of comprehensive regulations leads to uncertainties and many possible interpretations due to a lack of empirical values. Companies are therefore faced with the challenge of ensuring the correct tax treatment of their crypto assets.

Regulatory requirements for entrepreneurial activities with blockchain technology

The initial decentralization and lack of regulation of the crypto market made it extremely attractive for fraud and money laundering. However, as trading volumes increased, the market increasingly came under the scrutiny of financial supervisory authorities.

In 2019, BaFin defined Bitcoin, Ether and other cryptocurrencies as crypto assets that can be used both as private means of exchange and for investment purposes. At the same time, crypto assets were classified as other financial instruments. This brought with it strict regulations in accordance with the German Payment Services Supervision Act (ZAG) and the German Banking Act (KWG). Cryptocurrencies are also subject to the German Money Laundering Act (GwG), which requires the implementation of KYC processes.

The EU Parliament adopted comprehensive regulations on digital currencies in 2023 with MiCAR (Markets in Crypto-Assets Regulation). On the one hand, this is intended to promote the development of the technologies, while on the other, the regulations are intended to protect users and curb money laundering. There is therefore a need for action for companies that offer crypto asset services or act as crypto issuers. This involves, for example, checking whether a license is required under MiCAR, whether existing national licenses need to be supplemented or whether a white paper needs to be prepared.

Legal regulations on the tax treatment of crypto assets

The BMF published a comprehensive letter on the income tax treatment of cryptocurrencies in May 2022. The BMF presented a letter on VAT in 2018, but this was limited to the topics of mining and the exchange of fiat money for cryptocurrencies. To date, there has been no specific VAT classification for other digital assets, e.g. the taxation of NFTs or the taxation of staking.

Dealing with crypto profits with different legal forms

Crypto assets are part of a company’s business assets. Consequently, crypto assets must be declared and taxed correctly. Cryptocurrency transactions are always taxable and are subject to general income taxes.

The tax obligations vary depending on the legal form of the company: Profits from crypto transactions are subject to income tax for sole traders and partnerships, while corporations such as UGs, GmbHs and AGs are subject to corporation tax. In addition, all legal forms are subject to trade tax on crypto profits.

Valuation of digital assets for VAT purposes

The VAT valuation of digital assets is handled differently. In 2015, the European Court of Justice ruled that commercial transactions from the exchange of bitcoins into national currencies are exempt from VAT. However, there has not yet been a clear decision on this by the German tax courts or the tax authorities.

How crypto assets are treated for VAT purposes is ultimately unclear and raises many questions in practice, e.g. regarding the type of service provision, the place of performance, the applicable tax rate and input tax deduction. The existing VAT regulations are not or only insufficiently applicable to companies’ blockchain business models.

Due to these legal uncertainties and the associated challenges regarding VAT for crypto, you should always contact our crypto tax consultants. We will support you with these complex requirements and ensure that your VAT obligations are fulfilled correctly.

Crypto tax consultants: Trust in the expertise of ACCONSIS!

ACCONSIS is your contact for all aspects of accounting, income tax implications and VAT valuation of crypto assets. As experienced crypto tax consultants for companies, we advise and support you on the following topics:

Rely on the expertise of our crypto tax consultants to manage your business crypto assets in a legally compliant and efficient manner. Our advisory services help you to take full advantage of the opportunities offered by blockchain technology while avoiding tax pitfalls.

Hire a tax consultant for cryptocurrencies and digital assets?

Being legally compliant in the virtual spaces of the web3 is associated with numerous challenges. The current regulations often lag behind the development of digital business models and trading with crypto, NFTs and other digital assets.

This makes Web3 very complex and complicated from a tax law perspective, but does not release it from its tax obligations.

This is where we come in: ACCONSIS offers you blockchain tax advice for companies and private individuals. We can help you with all questions relating to the tax treatment of cryptocurrencies, NFTs, etc. in private and business assets.

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