Cryptocurrency payments can also serve as a form of remuneration for employees
In a landmark decision, the Federal Labor Court of Germany has confirmed that employers can pay commissions or bonuses in cryptocurrencies like Bitcoin or Ether, under certain conditions. The ruling, made on April 16 (Case No. AZR 80/24), is significant as it acknowledges the potential role of cryptocurrencies in the workplace.
The case in question involved an employee of a company in Baden-Württemberg active in the crypto sector who claimed a commission of 19.194 Ether. The employment contract of the employee, named Holger Schindler, explicitly stipulated payment in Ether. However, the employer refused to pay the commission in the agreed form of cryptocurrency.
The employer's argument was that wages must be paid in Euros according to the law, and payment in cryptocurrency is not allowed. However, the court ruled that payment in cryptocurrency is generally allowed, but only if it does not circumvent mandatory protective provisions.
The court's ruling follows a previous decision by the Regional Labor Court in Mannheim. The decision is particularly important regarding the unattachable part of the wages, which must be paid in cash. For employers, this means they can pay parts of bonuses, commissions, or success participations in digital currencies, as long as the remuneration is secured as a cash payment up to the attachment limit.
Cryptocurrencies are recognized as economic assets, not legal tender, under German law. This means they are not traditional means of payment but can still be used as a form of remuneration. The German Ministry of Finance treats cryptocurrencies as financial instruments or commodities, subject to taxation.
Payments in crypto are subject to income and salary taxes, just like fiat payments. Employers must report such payments properly to tax authorities. Since cryptocurrencies fluctuate in value, the employer must determine a fair market value at the time of payment to calculate tax and social security contributions.
Employers should keep detailed records of crypto payments, their amounts in euros at payment time, and ensure employees understand the implications. Compliance with upcoming regulations is also crucial, such as the implementation of the DAC 8 Directive by January 2026, which increases reporting transparency for crypto transactions.
In summary, paying commissions or bonuses in Bitcoin or Ether is legally possible in Germany if tax laws and reporting rules are followed correctly. Employers must treat crypto payments similarly to other non-cash benefits, applying relevant tax and labor regulations. The value of the cryptocurrency commission in question is currently greater than 27,000 Euros, making it one of the largest cases of its kind in Germany.
