German Court Rules on VAT Treatment of NFT Trading for Digital Art

• The Lower Saxony Tax Court ruled for the first time on VAT treatment of Non-Fungible Token trading for digital art objects through a digital marketplace
• A domestic sole trader sold NFT collectibles of digital image files on a worldwide platform, where only blockchain database entries were traded rather than the actual digital artwork itself
• The court classified NFT transactions as electronically provided services rather than deliveries, stating that pseudonymized crypto wallet addresses do not prevent the service from being taxable
• Since buyers could not be proven to be entrepreneurs and their locations were unknown due to the trader’s failure to fulfill disclosure obligations, the court estimated the domestic portion of taxable transactions
• No tax exemptions or reduced tax rates apply to domestic taxable transactions, as NFTs are neither legal tender nor securities, and reduced rates do not apply since no physical goods are delivered

Source: ebnerstolz.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---