German Court Orders Trader Who Made $3.8M Profit To Pay “Dumb’s Tax”

1. The German Federal Fiscal Court made a ruling saying crypto gains are taxable.
2. Traders who paid their taxes will be exempt from additional taxes should the crypto increase in value after a year.
3. A trader argued that not all are honest about their crypto gains, so a “dumb’s tax” is unconstitutional.

A crypto trader in Germany has made at least EUR 3.4 million (around $3.840 million) in profit and refused to pay any tax to the government, calling his profits “dumb’s tax.”

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However, the German Federal Fiscal Court made a ruling yesterday that all capital gains from transactions involving cryptocurrency are taxable. According to a local media outlet, investors and traders must now declare these gains on their income tax returns.

Crypto Now Falls Under Economic Goods

The article, which was originally written in German, also categorized crypto as economic goods and must be declared when purchased and sold within one fiscal year. This applies to all kinds of crypto-based transactions, as per the ruling.

However, once the individual has paid his or her crypto tax during the same fiscal year that he obtained his profit, any further profit from merely holding the coin will be exempted from any tax. 

For instance, if a Bitcoiner paid his crypto tax this year and the price of 1 bitcoin (BTC) rises to $1 million (from $24,000) in 2024, his gain of around $976,000 is exempt from tax.

“Dumb’s Tax”

The issue regarding crypto tax arose when an anonymous trader made gains of EUR 3.4 million and refused to pay taxes. According to him, crypto is merely a data record and not really an asset.

What is more, he made the argument that only honest people pay their crypto taxes. It is unclear what the plaintiff meant, although he argued that there are a lot of people who also made profits like him but did not report their gains. Hence, he called crypto income tax as “dumb’s tax.”

However, the court dismissed the trader’s arguments and ordered him to pay taxes based on his crypto gains.

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