The German government has declared bitcoin a "unit of account," making it a kind of "private money" that is subject to taxation.
According to local newspaper Frankfurter Allgemeine Zeitung, the finance ministry has declared that because bitcoin is a unit of account, mining the currency is a form of "money creation".
This means that bitcoins can be treated like shares, and any profit from them is subject to the country's capital gains tax. However, unlike with shares, the tax is not payable once the bitcoins have been held for over a year.
The ministry clarified bitcoin's status in response to a question from Frank Schäffler, a member of the Parliament's finance committee. He welcomed the news, contending that economist Friedrich Hayek would approve.
In the US a judge recently ruled that bitcoin is a "form of money", paving the way for a legal case against a man accused of running a giant ponzi scheme using the virtual currency.
Meanwhile, a New York regulator has sent out subpoenas to 22 bitcoin-related firms as it ponders new rules for virtual currencies.