ECJ: Bitcoin Treated Equally to Legal Currencies — Exchange Is VAT-Exempt!

Bitcoin Austria welcomes today’s ruling by the European Court of Justice (ECJ), which holds that no value-added tax applies when exchanging government currencies for the digital currency Bitcoin. In effect, Bitcoin is placed on equal footing with legal tender for tax purposes.

“This ruling sets an important precedent. Significant tax-law barriers to Bitcoin business models have now fallen across the EU. For Austria as a business location, this also means greater legal certainty. Over recent months, we have seen an impressive increase in innovative business concepts built around Bitcoin. The clarification by the ECJ will lead to a markedly growing acceptance of Bitcoin.”

said Johannes Grill, president of Bitcoin Austria, in an initial statement.

Bitcoin has existed since 2009 and is a global currency and payment system on the internet. It operates entirely independently of governments and banks. The ECJ decision was received very positively at international exchanges. The Bitcoin price rose by over 2% to 241 euros upon publication of the ruling.

Background of the Case #

Until now, EU member states had taken very different positions on whether Bitcoin is subject to VAT: Austria and Germany previously saw no grounds for a tax exemption; the Swedish Tax and Finance Court and the Belgian “Federal Public Service Finance” disagreed, ruling in favor of a VAT exemption. The UK’s HM Revenue & Customs classified Bitcoin as private money in order to likewise exempt trading from VAT.

After the Swedish Administrative Court of Appeal had doubts about the interpretation of the underlying VAT Directive, it referred the matter to the ECJ via a preliminary ruling procedure to obtain clarity.

The case before the Administrative Court concerned whether David Hedqvist could operate an online service for buying and selling Bitcoin against Swedish kronor on a VAT-exempt basis. The claim was brought by the Swedish tax authority against a preliminary ruling by the Swedish Revenue Law Commission, which had indicated to Hedqvist that a tax exemption would apply.

In addition to Mr. Hedqvist and the Swedish tax authority, the Federal Republic of Germany, the Republic of Estonia, and the European Commission also submitted written observations on the questions referred to the ECJ.

Source:

• ECJ Ruling C-264/14 (Hedqvist) - Full text of the ruling on the official European Court of Justice website