Bitcoin exempt from VAT, European Court of Justice rules
The European Court of Justice said on Thursday that the digital currency bitcoin is exempt from value added tax (VAT).
This means that bitcoin will be treated the same as traditional money across the 28 EU member states.
The ECJ concluded: “Those transactions are exempt from VAT under the provision concerning transactions relating to ‘currency, bank notes and coins used as legal tender’,”
The ruling was in response to Swedish tax authorities asking the European Court of Justice whether bitcoin transactions should be covered by a EU directive exempting currency transactions from VAT.
But ECJ said that bitcoins are not considered the sale goods, pointing out that they serve no other purpose than as a means of a payment. Therefore, the ECJ said that bitcoin should be protected under the directive.
The decision is seen as another step forward in mainstream acceptance of digital currencies.
According to ITPRO, Jonathan Rogers, a financial services regulatory group partner for Taylor Wessing, commented:
“From a strategic perspective, this decision, which appears to ensure virtual currencies will be seen as cash, should be an opportunity for emerging forms of financial services & FinTech to get a shot in the arm – bringing growth and consolidation,”
“Greater clarity can now emerge in the debate about how to regulate virtual currencies, leading to increased credibility and consumer confidence; in turn, virtual currencies will have a much greater critical mass in the financial services system.”