How can a DAO handle taxes on its income and profits?

With regard to the coverage under the German Income Tax Act (Einkommensteuergesetz, EStG), the activity and structure of the DAO are decisive in the individual case. In any case, the substantive taxation of the DAO would be based on the transparency principle. This means that the DAO as such is not subject to income tax, as each shareholder is already subject to income tax itself.

The DAO’s income is only classified for income tax purposes if it is engaged in commercial activities pursuant to § 15 Ab.1 Nr. 2, Abs. 3 Nr. 1 EStG. In the case of purely private asset management, there is no taxation of the income.