Brussels, 22/10/2015 (Agence Europe) - Operations to exchange traditional currency for the virtual units of currency 'bitcoin' are exempt from VAT, the Court of Justice of the EU concluded in a judgment (case C-264/14) returned on Thursday 22 October.
The 'bitcoin', which was developed anonymously in 2009 and which is constantly increasing in popularity, is used as a unit of account in a payment system specific to the Internet network. Its legal status had not yet been clearly established, as it was frequently not considered to be legal tender, or even a means of payment or electronic currency. By exonerating the purchase of this currency from VAT, the Court has at the same time established that the 'bitcoin' should be seen as a currency in its own right.
The Supreme Court of Sweden brought the matter before the Court of Justice, having faced two contradictory opinions on this issue. The Swedish tax law committee argued that the 'bitcoin' was a means of payment used in a similar way to legal tender and, therefore, operations to purchase it should be exempt from VAT. The Swedish tax authority took the opposite view.
The European judges have now ruled that the 'bitcoin' is a currency like any other. This means that operations to exchange traditional currency for units of this virtual currency (and vice versa) should be exempted from VAT under the VAT directive (2006/112/EC) and its provision regarding operations concerning coins, banknotes and currency which are legal tender.
The Court substantiates this by the fact that these operations constitute services provided for a consideration. If VAT were to be applied, this would damage the objective of the exoneration laid down in the directive, which is to offset the problems which arise in the framework of the taxation of financial operations as regards the determination of the tax base and the amount of deductible VAT, the Court explained. (Original version in French by Jan Kordys)