NEWS
NEWS
NEWS
Big win for Bitcoin as EU Court of Justice rules transactions can’t be charged VAT
In a big win for the Bitcoin and cryptocurrency sector, Europe’s highest court has ruled that the likes of Bitcoin should be exempt from value-added tax (VAT) and treated like any other currency
The European Union’s Court of Justice ruled on a case that considered whether purchasing Bitcoin is similar to purchasing a service that would usually be liable for VAT following a June disagreement between Sweden’s tax authority and Daniel Hedqvist, operator of a Swedish Bitcoin forum and exchange; Sweden wanted to charge VAT and Hedqvist argued it wasn’t allowable under European Union rules.
Of note that while the United Kingdom had exempted Bitcoin transactions from VAT, other countries including Germany wanted to charge the tax.
The ruling from the court found that when Bitcoin exchanges transfer fiat currencies into Bitcoin for a fee they are exempt from EU rules barring such taxes on transfers of “currency, bank notes and coins used as legal tender.”
The ruling delivers certainty for Bitcoin across the 28 nation European Union by removing any future threat of taxes any one of the member states may have decided to implement, usually for revenue raising purposes in the future.
“It’s very good news,” Bnktothefuture.com Chief Executive Officer Simon Dixon told Bloomberg Business. “If you were taxed on the exchange it would make it an inferior currency to other currencies, so the implications of it being treated as a currency are that it can free flow.”
Precedent
While a ruling of the European Union is not binding outside of its constituent states, the court case none the less sets a precedent on how to treat Bitcoin when it comes to the imposition of value added and similar services taxes across the planet, and may even influence other countries in the future when they too consider the best way to deal with Bitcoin and other cryptocurrencies.
As an influential precedent it may be too late for some countries such as Australia that already charge a local equivalent of a VAT on Bitcoin transactions (in Australia it’s the Goods and Services Tax of 10 percent) but it will give solace, and indeed something to wave around by both activists and those trading in the industry to have rulings such as Australia’s overturned.
The ruling is effective immediately in the European Union and can only be overturned by a change of European Union law which is highly unlikely.
Image credit: Pixabay/ CC 0 Public Domain
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