Bitcoin transactions will be exempt from Value Added Tax (VAT), the European Court of Justice (ECJ) has ruled.According to the Financial Times, the ECJ said that bitcoin transactions "are exempt from VAT under the provision concerning transactions relating to currency, bank notes and coins used as legal tender."The ECJ's long-awaited ruling comes after its Advocate General Juliane Kokott urged the court to refrain from applying tax to bitcoin purchases and sales, in an opinion document published in July.The European court first looked into bitcoin taxation in June last year after the Skatterverket – Sweden’s tax office – challenged a court decision that ruled bitcoin transactions in the country should be exempt from VAT, following a dispute with bitcoin forum operator Daniel Hedqvist. The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies.Have breaking news or a story tip to send to our journalists?

Contact us at [email protected]/* */.Previous Article FATF: Virtual Currencies Could Fuel Terrorism Financing Next Article Bitcoin Groups and Law Enforcement Unite to Form Blockchain...Value Added Tax (VAT) & Bitcoin – A Summary The Court of Justice of the European Union received on 02.06.2014 the Preliminary Ruling of The Swedish Supreme Administrative Court (“Högsta förvaltningsdomstolen”) on the interpretation of Article 135.1 of the Directive 2006/112/EC on VAT taxation on bitcoin.

and founder of www.bitcoin.se), who intended to carry on a business through a switching operation with the virtual currency bitcoin to “fiat” currency.The Swedish Authority for the Ruling first dealt with the Decision 10.14.2013 (ref./ I Mervärdesskatt: Handel med bitcoins) on trade in bitcoins.The Ruling resolved that the absence of the definition of the term “currency” in the VAT Directive leads to the interpretation of this term as a means of payment.In the Article 135.1 of Directive 2006/112/EC letter e) (“transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest”) the term currency is not associated to legal tender.crear cuenta bitcoin gratisThe presence of the exception of the "collectors’ items" that certainly were legal tender, but are not normally used as such because they are collectors’ items, is reported only to coins and banknotes.report bitcoin mining income

This excludes the concept of "currency" of the need of legal tender.On the basis of these considerations:- Exchange of bitcoin requires similar requirements to intermediation of financial services,- The bitcoins are a means of payment used in a similar way to legal tender,- The bitcoin have strong similarities with electronic money.The Authority for the Swedish Ruling held that bitcoin transactions should be considered as transactions concerning currency referred to in Article 135.1. letter e), consistent with the purposes of the exemptions provided for in Article 135.1.ethereal companion wow(Avoid the difficulties associated with applying VAT to financial services.).litecoin hard wareTax Swedish Tax Authority (Skatteverket) appealed the Decision 32-12.ethereum nvidia/ I to the Swedish Supreme Administrative Court that considered the case (Case No.bitcoin national summit

7101-13) and resolved to submit a Preliminary Ruling under Article 267 TFEU.The Swedish Supreme Administrative Court reflected that the Court of Justice had never considered how Article 135.1 d), e), f) of the Directive 2006/112/EC must be interpreted with respect to foreign exchange transactions related to virtual currencies.According to the Supreme Administrative Court's opinion, it is unclear whether any of these exemptions could include those exchange transactions.The Supreme Administrative Court raised the following questions: Does the exchange of virtual currency with “fiat” currency constitute a supply of service under VAT Directive?/r/bitcoin asking for help funding legal costs for supporting the case hiring a top law firm in Sweden (language of the case is Sweden); the problem was resolved on August, 26th with an anonymous donor who covered all expenses and let Hedqvist hiring Mannheimer Swartling.Many lawyers and tax consultants (included me) offered pro-bono assistance to Heqvist because the case will decide if and how VAT should be applied to bitcoin throughout the EU.The situation in Europe is very heterogeneous and only a few Member States gave interpretations: GERMANY: The German Ministry of Finance, answering (DOK: 2013/0752711 and 2013/0883337) to deputy Frank Schaeffler (No.

409 of July 2013, n.226, September 2013), resolved that bitcoins are "private money" or complementary currencies, used as a means of payment in the multilateral clearing system and based on private agreements.The Ministry denied the exemption as coin and/or foreign currencies (Article 4 number 8 letter b of the German VAT Law - UStG) and considered bitcoin VAT exempt pursuant to point c, (Art.135.1 d Directive 2006/112/EC), as “transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection”; considering that the mere payment does not constitute the provision of the service and therefore not subject to VAT.UNITED KINGDOM: HMCR, with Revenue & Customs Brief 09/14 resolved that: Income received from Bitcoin mining activities will generally be outside the scope of VAT on the basis that the activity does not constitute an economic activity for VAT purposes because there is an insufficient link between any services provided and any consideration received.

Income received by miners for other activities, such as for the provision of services in connection with the verification of specific transactions for which specific charges are made, will be exempt from VAT under Article 135(1)(d) of the EU VAT Directive as falling within the definition of 'transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments.'When Bitcoin is exchanged for Sterling or for foreign currencies, such as Euros or Dollars, no VAT will be due on the value of the Bitcoins themselves.Charges (in whatever form) made over and above the value of the Bitcoin for arranging or carrying out any transactions in Bitcoin will be exempt from VAT under Article 135(1)(d) as outlined at 2 above.ESTONIA: The Estonian tax authority (Maksu Tolliamet-ja), in March of 2014, published on its website an interpretation of the taxation of bitcoin, resolving that bitcoin does not fall under any of exemption of article 135.1 of Directive 2006/112/EC, because the financial services are listed and requires certain characteristics that bitcoin does not have.

The authority bases its resolution in a strict interpretation of means of payments, electronic money, securities and financial services, considering transactions in bitcoin as provision of services subject to normal VAT taxation.POLONIA: The directors of the local tax authority in Poland (Interpretacja Dyrektora Izby Skarbowej w Łodzi, IPTPP2/443-52/14-6/IR, Poznaniu ILPP1/443-912/13-2/AW, Katowicach, IBPP2/443-762/13/ICz in http://www.epodatnik.pl/) resolved the sale of bitcoin couldn’t be exempted under art.135.1 of the Directive 2006/112/EC and therefore, as a service, is subject to normal VAT taxation.The interpretations were based on the assumption that the exemptions referred to Directive 2006/112/EC must be interpreted strictly (CJEU Judgment no.C-461/08 paragraph 25) and that the same exemptions (pursuant to art.131) are subject to the conditions laid down by the Member States, even if is recognized that bitcoin is, at the same time, a unit of account and a payment system, but: The payment system does not have any issuers or any institutions to supervise.