About Us
Our Way to Crypto Law
Our firm (www.sp-soeffing.com) is based on the advice on tax-optimized structuring of transactions and assets of investors, entrepreneurs and their enterprises. Founded in 2002 by Dr. Matthias Söffing, S&P SÖFFING has been aligning and continuously developing our advisory services to meet the individual needs and goals of our clients. Starting with the investment in cryptocurrencies, the blockchain / DLT technology and the related opportunities also rapidly evolved relevance for our clients.
This development has led us to develop a special competence in the tax-optimized structuring of Crypto Assets, both in actual and (tax) law terms. We follow the current developments and areas of application of blockchain technology, identify the advantages but also the risks for our clients and design tailor-made concepts.
We advise our clients in all stages and all areas related to crypto investments and transactions, for example when entering the market for the first time, optimizing professionally set up DeFi investments all the way to crypto value-based financing and structuring of the client’s business.
Our services also comprise advice on criminal tax law, a field in which we can provide our clients with extensive expertise from many years of advising on voluntary declarations.
We pursue our clients’ interests with discretion, integrity and professionalism.
We advise on the following Topics
- Transactions on Cryptocurrencies, Utility and Security Tokens
- Decentralized Finance (DeFi) applications
- Succession Planning on Crypto Assets
- Crypto Assets as Business Assets
- Initial Coin Offerings (ICO) / Fundraising
- Transactions on Non-Fungible Tokens (NFT) and Fan Tokens
- Advance Rulings on planned Crypto Transactions
- Supplementary Tax Declaration and Voluntary Self-Disclosures relating to Crypto Transactions
News
Interesting facts, court rulings, publications, events and more on the topic of Crypto Assets
Treatment of virtual currencies and other tokens under German Income Tax Law
Due to popular demand a courtesy translation of the Federal Ministry of Finance’s circular „Einzelfragen zur ertragsteuerrechtlichen Behandlung von virtuellen Währungen und von sonstigen Token“ of 10 May 2022, Federal Tax Gazette I p. 668, is hereby provided. Please note the non-binding character of this translation and refer to the circular’s German version for legal guidance on the income tax treatment of virtual currencies and other tokens.
Link to the document
Dr. Steffen Kranz: BMF letter on the income tax treatment of virtual currencies and other tokens – the path from draft to final version, Tax Lawyer Magazine 3/2022
Tax declaration, cooperation and recording obligations with regard to virtual currencies
The Federal Ministry of Finance (“Bundesministerium für Finanzdienstleistungsaufsicht”, BMF) has commented on this topic for the first time in a draft for a first supplementary letter to the BMF guidance letter of 10 May 2022. Private investors take note: If units of a virtual currency or other tokens are acquired or sold either via the trading platform of a foreign operator or via a decentralised trading platform (DEX), so-called foreign affairs within the meaning of Section 90 (2) of the German Fiscal Code (AO) shall be assumed, which would trigger […]
Status Quo in the income tax treatment of virtual currencies – Lessons learned on the way to the final version of the BMF letter dated May 10, 2022
Article by Dr. Steffen Kranz, LL.M. in NWB-EV No. 7 of 06.07.2022 Page 214 The tax authorities have disclosed their opinion regarding individual questions on the income tax treatment of virtual currencies and other tokens in the BMF letter dated May 10, 2022. The classification of virtual currencies as other assets within the meaning of Section 23 (1) sentence 1 no. 2 sentence 1 EStG is uniformly and unambiguously affirmed within the fiscal court rulings and the BMF letter. This article provides an overview of the status quo regarding […]
German lawyer’s day 2022 – presentation on cryptocurrencies and crypto assets
Federal Ministry of Finance – Letter dated May 10, 2022 on individual questions regarding the income tax treatment of virtual currencies and other tokens
When does the game end and (real) economic life begin?
In-game services, such as the rental of virtual land, are not subject to VAT. The sale of the tokens received for this service can, however, lead to a service that is subject to VAT. This was the conclusion reached by the 5th Senate of the Federal Fiscal Court (BFH) in its ruling of 18 November 2021 (Ref. V R 38/19), which was recently published. The highly abbreviated facts on which the judgment was based: The taxpayer (plaintiff) acquired virtual properties through the Second Life Market Place as part of his […]
Second ruling on income taxation due to liability from the sale of crypto assets
The Cologne Fiscal Court has published the ruling of its 14th Senate dated 25 November 2021 (Case No. 14 K 1178/20). This is the second ruling by a German tax court on the taxation of “cryptocurrencies” or – in the terminology of the German tax authorities – “virtual currencies”. The first ruling came from the Baden-Württemberg Fiscal Court and was already pronounced on 11 June 2021 (Case No. 5 K 1996/19). In substance, both proceedings are comparable, since here as well as there the tax liability of gains is an […]
First German court ruling on taxable sales of cryptocurrencies
Here is the first ruling of a German fiscal court on the taxation of “cryptocurrencies” or – as the German fiscal authorities call them – “virtual currencies”. It is the decision of the Baden-Württemberg Fiscal Court of June 11, 2021 (Case No. 5 K 1996/19), which was recently published. In summary, the case in dispute concerned a taxation of gains realized in 2017 from the sale of cryptocurrencies held as private assets within the relevant period of one year. Of course, such a ruling gives many taxpayers and their advisors […]
Hearing of BMF dated August 19, 2021 on the Income Tax Treatment of Virtual Currencies and Tokens
On June 17, 2021, the German Federal Ministry of Finance (BMF) had published a draft of a BMF letter on the income tax treatment of tokens in general and virtual currencies such as Bitcoin in particular, which had been coordinated with the supreme tax authorities of the German states. Subsequently, the BMF received numerous comments from various associations, most of which appreciated the general aim of the BMF letter to improve legal clarity and thus also planning certainty, but at the same time expressed extensive criticism on the partly undifferentiated […]
Draft Guideline of the tax authorities on the Income Tax Treatment of Virtual Currencies and Tokens
On June 17, 2021, the German Federal Ministry of Finance (BMF) published a draft of a BMF letter on the income tax treatment of tokens in general and virtual currencies such as Bitcoin in particular, which was coordinated with the supreme tax authorities of the German states. The later finalized BMF letter is intended to provide practitioners in administration and business and individual taxpayers with a guideline on the income tax treatment of tokens and virtual currencies. The content confirms the approaches already taken in the taxation practice of many […]
Cryptocurrencies and their Tax Risks
Cryptocurrencies, are increasingly gaining attention from private and institutional investors. The flagship of all cryptocurrencies is still Bitcoin. Compared to today, this “digital currency”, which was already launched at the beginning of 2009, still had a somewhat niche existence at a price of less than € 1,000 at the end of 2016. After a highly volatile development, Bitcoin was listed at over € 54,000 at the beginning of 2021, but has been subject to strong fluctuations in value since then. Meanwhile, there are more than 10,000 other cryptocurrencies (so-called altcoins), […]
Dr. Steffen Kranz: Cryptocurrencies – Pseudonymity and Anonymity under Income Tax Law, Tax Lawyer Magazine 2/2021
As of 1 July 2021, domestic Special AIFs can invest in Crypto Assets
With the aim of improving the German fund location’s future and international competitiveness, domestic Special AIFs with fixed investment conditions are to be able to invest up to 20% of the fund’s assets in Crypto-Assets (Sec. 1 para. 11 sentence 4 of the German Banking Act (KWG)) from July 1, 2021. This is provided for in the government’s draft of the so-called Funds Location Act (FoStoG), which is intended to implement corresponding amendments to the German Investment Code (KAGB) and the German Investment Tax Act (InvStG). The German Parliament (Bundestag) passed this law on 22 April 2021 The Federal Council (Bundesrat) is expected to give its approval before the end of May 2021. This new regulation could not only result in significant new investments, but also contributes to the steadily growing acceptance of Crypto Assets in Germany as investment objects in high demand worldwide. However, the acquisition of Crypto Assets for mutual funds will not yet be permitted.
Dr. Steffen Kranz: Private investments in Crypto Assets, NWB – Estates and Wealth (5/2021)
Tax payment with cryptocurrencies
The Swiss canton of Zug is already known as “Crypto Valley”. Numerous blockchain and crypto companies have already been able to find an ideal environment there and the settlement of further companies is being intensively advertised. Private investors also have the opportunity to collect profits from the sale of cryptocurrencies tax-free. Now the canton of Zug has taken the next step and is opening up the way for companies and citizens to pay their taxes with Bitcoin or Ether. This is an excellent example of how quickly states can adapt to developments and use them for their own benefit.
FAN-Tokens
Crypto assets have now also arrived in sports. Sports clubs, which have been battered by Corona, see so-called Fan Tokens as a way to both achieve a positive financing effect and build stronger ties with fans. For example, fans can buy the tokens on exchanges and trade them. In addition, fans can use these tokens to have a say in various club issues, such as which artwork should hang in the team’s locker room. This is what happened, for example, with FC Barcelona, which raised over $1 million within an hour by issuing its fan tokens. The development in this field is rapid, as more and more clubs, racing teams, etc. discover the opportunities that fan tokens offer to them and their fans.
Dr. Steffen Kranz LL.M.
Attorney at Law | Certified Tax Lawyer
As a partner at S&P SÖFFING KRANZ, Steffen is responsible for advice related to Crypto Assets. Prior to joining S&P SÖFFING KRANZ, Steffen worked as a lawyer in tax-focused transaction advisory at an international business law firm and an accounting firm.
Recent publications and lectures:
- Private Investments in Crypto Assets, NWB - Erben und Vermögen, 5/2021.
- Cryptocurrencies - pseudonymity and anonymity in income tax law, SAM 2/2021
- 27th Tax Lawyers' Day 2021 on tax law aspects of transactions with Crypto Assets.
