Tax Summary:

1. Personal income tax – from 0% to 45%
2. Corporate income tax – 10% and 18% 

What law/s governs VASP activities?

1. Kreditwesengesetz (Banking Law; (“KWG“))
2. Geldwäschegesetz (Anti-Money Laundering Law; “GWG”))
3. Kryptowertetransferverordnung (Regulation on enhanced due diligence in the transfer of crypto-assets; “KryptoWTransferV”))
4. BaFin Guidelines for crypto custody business

What activities are included in VASP services?

KWG, unlike other European jurisdictions, does not operate under the term “virtual asset service provider”, instead the KWG identifies only one type of regulated virtual asset activity that requires authorization – the cryptocurrency custody business (paragraph 6, article 1a, section 1).

Crypto custody business is defined as the custody, management and protection of cryptoassets or private cryptographic keys used to keep, store or transfer cryptoassets for others.

The crypto custody business includes the following:

1. Custody – taking care of crypto assets of clients, i.e. as a service to third parties.
2. Management – is the ongoing exercise of rights derived from the cryptoasset.
3. Security (protection) – is the storage of cryptographic keys.

Other services, such as exchange services, require general financial authorisation.

Who is the VASP regulator?

1. Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”)

What is the procedure for registering a VASP for a local company?

To get authorisation from BaFin you need to:

1. Establish a local LLC with authorised capital of 150,000 euros.
2. Have a competent and reliable director.
3. Appoint a competent and reliable AML officer and deputy AML officer.
4. Have a local physical office.
5. At least one director must be local.
6. Write AML documentation.
7. Write IT documentation.
8. Write a business plan.
9. Documents that confirm the reliability of the AML officer, his/her deputy, shareholders, and directors.
10. Make an application to the BaFin together with the above-mentioned documents and documents confirming the authorized capital, and availability of a local office. The application should also contain information about the founders, directors, and the company.
11. A fee of 10 750 euros is required to be paid to the regulator for the application.

Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?

According to the BaFin possibility of pursuing cross-border activity by means of a notification process (“European passport”) which is available to institutions in the European Economic Area for other types of banking business and financial services does not apply in case of crypto custody business.

Companies wishing to provide cryptocurrency services in Germany need to authorize the company according to local rules.

What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?

According to Article 54 KWG, the provision of a financial service without authorisation in accordance with Article 32 (1) (without BaFin authorisation) is punishable by imprisonment of up to five years or a fine at the discretion of BaFin.

Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.