The German finance ministry said it will not levy taxes on cryptocurrencies if they are used as legal tender. The resolution follows the decision of the European Court of Justice, which sets a precedent for other states of the European Union.

The German Federal Ministry of Finance (BMF) published a new manual, according to which bitcoin and other cryptocurrencies are excluded from taxation if they act as a payment instrument.

"The use of bitcoin is equal to the use of ordinary means of payment if they serve no other purpose than the method of payment. Thus, the use of bitcoin for simple payments is not taxed," the document says.

From the taxation point of view, this means that when the buyer pays with bitcoins buying goods or services, an article of the EU's VAT Directive will be applied to the price of bitcoin at the time of the transaction, as documented by the seller. However, the actual conversion of cryptocurrency into fiat money is classified as a "supply of services," so the party acting as an intermediary for the exchange is not taxed.

The document is based on the Decree of the European Court of Justice on Value Added Tax of 2015, which forms a precedent on possible exceptions for certain types of transactions with cryptocurrencies for all member states of the European Union.