A German tax court in Lower Saxony has issued a landmark ruling concerning the value-added tax (VAT) treatment of Non-Fungible Token (NFT) sales. The court announced its decision on Wednesday.
The case involved a trader who conducted NFT transactions via a platform in 2021 and maintained the transactions were exempt from VAT. However, the court rejected this position, confirming that the transactions constitute “other services” as defined by Section 3(9) of the German VAT Act (UStG).
The judges determined that the pseudonymized crypto wallet addresses of buyers do not preclude VAT assessment. As the plaintiff had failed to fulfill their duty of clarification and the precise proportion of domestic sales remained unascertainable, the court estimated taxable sales at half of the total revenue. The court found no grounds for a tax exemption or structural enforcement deficit.
The ruling, issued by the 5th Senate, is legally binding. However, an appeal to the Federal Finance Court (Bundesfinanzhof) has been admitted. This decision represents the first of its kind by a German tax court regarding the VAT implications of NFT transactions and could serve as a precedent for the taxation of digital assets.