A plaintiff in Germany who attempted to argue that $3.6 million in crypto gains were not taxable income but instead constituted a “data set” lost the case in front of Germany’s largest financial court on Feb. 28.

In a significant ruling on the tax registration of virtual currencies, the Federal Fiscal Court (BFH) in Germany has determined that capital gains from cryptocurrency transactions are subject to taxation.

As per the rules for income from private sale transactions, crypto investors are obligated to declare these gains on their income tax returns.

On Feb. 28, the BFH declared that cryptocurrencies are considered economic goods subject to an income tax liability for private sales transactions if bought and sold within a year.

However, if investors hold onto the currencies for longer than a year, any profits earned will be tax-free, which is not the case with shares, per German law.