NFT sales now fall under Value-Added Tax (VAT) as per a court decision in Finance.
The Lower Saxony Finance Court has established a landmark decision regarding the Value Added Tax (VAT) treatment of Non-Fungible Token (NFT) sales in Germany. This ruling, announced on Wednesday, marks the first decision by a German financial court on the VAT treatment of NFT transactions.
The court confirmed that NFT sales constitute other services under § 3 (9) UStG, making them subject to the standard 19% VAT rate for electronically supplied services. This ruling clarifies that NFTs are not sales of goods but digital services.
In this case, the buyers, not the digital marketplace platform, are considered the recipients of these services for VAT purposes. Sellers of NFTs acting as entrepreneurs are liable to charge and remit VAT on these sales unless exemptions apply or the buyer is a VAT-registered entrepreneur.
The court rejected arguments that anonymous or pseudonymized blockchain transactions could exempt sellers from VAT compliance, emphasizing that pseudonymization does not prevent taxation, and sellers must demonstrate buyer status if relevant for VAT treatment.
This decision strengthens Germany’s regulatory framework for taxing digital assets, making VAT compliance mandatory for NFT sellers regardless of anonymous blockchain features. It also aligns German VAT treatment of NFTs with the EU approach to electronically supplied services.
The ruling could set a precedent for the taxation of digital assets, potentially influencing future decisions on cryptocurrency and other digital services. However, it should be noted that the decision allows for an appeal to the Federal Finance Court.
For tax practitioners and NFT traders in Germany, this ruling provides authoritative guidance on managing VAT liabilities associated with NFT sales. It's essential to understand the implications of this decision, including the nature of the supply, the taxable person, the VAT place of supply, and the impact of buyer status on VAT obligations.
[1] Lower Saxony Finance Court Ruling on VAT Treatment of NFT Sales (2025) [4] German VAT Act (UStG) [5] EU VAT Directive on Electronically Supplied Services (2002/38/EC)
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