Key Facts:
The small business regulation (§ 19 UStG) exempts small businesses from charging VAT – but also excludes them from deducting input tax.  
Anyone investing as a small business cannot reclaim the VAT paid, even if they later switch to regular taxation.  
Only once under regular taxation can an input tax adjustment according to § 15a UStG apply under certain conditions.  
Conversely, those returning to the small business scheme must repay part of any previously deducted input tax.  
The tax authorities scrutinize these transitions meticulously – mistakes literally cost money. 

In recent years, cryptocurrencies such as Bitcoin, Ethereum, and Monero have gained significant importance. But how are profits from the sale of cryptocurrencies taxed? And what happens if investors lose their investments on dubious online platforms? This article will shed light on the current legal situation in Germany, the EU, the UK, and the USA.
Profits from Cryptocurrencies: Subject to Income Tax
The Cologne Tax Court ruled in a judgment dated November 25, 2021 (14 K 1178/20) that profits from the sale of cryptocurrencies are subject to income tax. The plaintiff had exchanged Bitcoins for Ethereum units and later for Monero units, then exchanged them back to Bitcoins and sold them. The court found that cryptocurrencies constitute "other economic goods" within the meaning of § 23 Para. 1 No. 2 EStG and that their classification as economic goods does not violate the principle of definiteness.
The Baden-Württemberg Tax Court also ruled in a judgment dated June 11, 2021 (5 K 1996/19) that earnings from the sale of cryptocurrencies constitute other income/income from private sales transactions. The tax office is not obligated to verify in detail the calculation of the sales profits by the taxpayer.
Losses from Dubious Online Platforms: Not Recognized as Negative Income
The Hamburg Ministry of Finance stated in a decree dated February 22, 2022 (S 2256 - 2022/001 - 52) that losses from investments on dubious online platforms cannot be recognized as negative income from private sales transactions. This is because there is no sale of the so-called cryptocurrencies.

​In crisis situations, the Collection of Guiding Values is not the measure of all things. 
The Collection of Guiding Values ─ also known as the Tax Audit Card Index ─ is an important tool for tax auditors in the context of tax audits. By means of this card index, turnover and profits of traders are compared, but also estimates are made in the event of inadequate documentation. This card index is updated annually. However, the tax authorities currently ─ BMF letter dated November 28, 2022 Az. IV A 8-S 1544/19/10001:006 ─ point out that, in the event of deviations from this index, auditors should pay particular attention to the individual circumstances of each business to be audited. 

The transparency register in Germany was created in 2017 through the German Money Laundering Act (GwG). The purpose of this register is to record availably to vision the actual beneficial owners of a company (so-called legal entities subject to transparency in accordance with art. 20, 21 GwG) or an organization, which simply means that everyone can inspect this register.
The previous regulation indicated that entries into the transparency register are only necessary if the information on the beneficial owner did not result from existing, electronically accessible entries in other registers, such as the trade register or the register of associations. This notification feature no longer exists and the transparency register becomes a full register. The entry of the beneficial owner in the transparency register is now absolutely required.

​A permanent establishment, or a business branch, in the fiscal sense in Germany, is a fixed business facility with the power of disposition of the company in which the business activity is carried out in whole or in part. Activities that are contended to the company's purpose, such as IT activities (programming, app development), count as business activities. Activities of preparatory nature or auxiliary activities (for example, administrative activities) are not included.
According to the OECD Model Agreement 2017 for the (non-binding) interpretation of double taxation treaties, a home office permanent establishment may exist in the form of a fixed business facility if the home office is regularly and permanently used by the employee for business activities and the activity is carried out in the home office at the request of the employer. In such cases, it can be assumed that the home office is at the disposal of the company and that there is the power of disposition required for the permanent business establishment. However, if it is possible for the employee to use a workplace in the company, the employer has no power of disposal over the home office even if a large part of the work is carried out in the home office.

The Regional Tax Office of Nordrhein-Westfalen has published the audit fields of the financial administration for 2021. It can be assumed that the tax offices of the other federal states will set similar priorities in income tax returns and in audits. This can also affect earlier years.
The following audit fields are of particular interest to corporations:

When a non-profit corporation grants its managing director a disproportionately high remuneration for work, it constitutes a misuse of funds (German Federal Court of Finance, judgment of March 12, 2020, V R 5/17). This can lead to the revocation of the non-profit status of the corporation by the German tax office. The board members should check, or let check, in advance of any salary adjustments their respective proportionality, as they can, and must, be determined in accordance with the arm's length principle. ​

According to Section 3 of the German Occupational Safety and Health Act, the employer is obliged to take all measures appropriate to the circumstances of the company to protect the employee from infection. The health and safety regulations of the German Federal Ministry of Labor and Social Affairs are constantly being revised and all employers are obliged to inform themselves about them as soon as possible. As soon as an employer is unsure which protective measures need to be taken for his specific company, he can contact the German Federal Institute for Occupational Safety and Health (BAuA). 
The employer is responsible for the operational health care, but not for the public health care. 

Employee's refusal to work 
If the employer takes the necessary protective measures and informs the employee about it, he can demand the work performance from him. The mere fear of infection does not release the employee from the duty to work. 
Exception: the employee belongs to a risk group. In this case, the employee should provide a medical certificate and the employer and employee must work together to find a solution. Usually, they then agree on a sick leave. 
If the employee refuses to work despite everything, the employer can issue a warning or even notice. 

For the period from July 1, 2020 to December 31, 2020, the sales tax in Germany will be reduced from 19% to 16% for the standard tax rate and from 7% to 5% for the reduced tax rate. The application of the tax rate is based on the performance date.
For companies entitled to deduct input tax, it does not matter whether the service was received before or after the time of the tax rate change; it is important that a correct invoice is available. Invoice defects lead to the loss of the input tax deduction. However, if services are rendered to recipients who are not entitled to deduct input tax, they should be carried out during the above-mentioned period if possible. 

A. Tax classification of COVID19 grants
The COVID19 emergency grants-in-aid from the German federal and state governments are taxable grants and must, therefore, be treated as operating income. Accordingly, they must be recognized in the determination of income as other operating income; as real subsidies, they are not subject to VAT.
B. Correct use of the COVID19 grants:
I. Check for eligibility:
1) Requirements for ALL grants (from the federal and state governments in Germany):

• the professional activity is the main source of income AND
• the applicant is actually in an existence-threatening economic situationdue to the effects of the COVID19 epidemic.
  Partially self-employed persons such as employees, civil servants, pensioners, students, etc. cannot apply for the grants. Similarly, companies that were already in economic difficulties before the outbreak of the COVID19 epidemic are not eligible to apply.

Recently, a new special depreciation rule was created in Germany pursuant to § 7b EStG (German Income Tax Act) for the purchase and production of new rental apartments. In addition to the annual straight-line depreciation of 2% per annum, the special depreciation amounts to up to 5% per annum over a total period of 4 years. The special depreciation favours new housing developments, which were produced on the basis of a construction application submitted after 31 August 2018 and before 1 January 2022. ​

Through a federal-and-states decree, which was recently made public by the Tax Authority Hamburg, a tax-saving model for profit determinations under art. 4 sec. 3 EStG (German Income Tax Act) connected with leased company cars is to be prevented. Until now, high special leasing payments for leasing contracts with a term of less than five years have resulted in immediately deductible operating expenses in full. The later, very small leasing rates then resulted in small expenses. ​