Finnish regulators have classified bitcoin as a financial service, thus granting it VAT-exempt status.The Finnish Central Board of Taxes (CBT) judged bitcoin to be a financial service in ruling 034/2014, which states that bitcoin purchases qualify as “banking services” under the EU Value Added Tax (VAT) Directive.The ruling was issued after a court classified bitcoin as a payment instrument and sets Finland’s approach to the cryptocurrency apart from most European jurisdictions, which generally treat bitcoin as a commodity.However, the nation is not completely alone in taking this approach: Belgium’s Federal Public Service Finance (FPS) issued a similar ruling in September.Richard Asquith, vice president of global tax compliance at Alavara, told the International Tax Review that Finland’s ruling could help change the way bitcoin is viewed domestically.“By making bitcoins a recognized payment instrument, Finland has pushed it towards being regarded as a formal currency," said Asquith.

He warned, however, that the decision, in the absence of EU-wide regulations, could cause more regulatory problems: "This would not be welcomed by European central banks as it would trigger wider financial regulation issues."For the time being, European regulators and legislators are not making much headway and it is expected that no clear EU-wide rules on bitcoin VAT will be in place for another two years.While not following the general European Union path on this matter, the Finnish ruling does cite the EU VAT Directive.This seeming contradiction is down to the fact that the EU does not have a joint digital currency framework and therefore existing legislation is open to interpretation by individual nations.Different European countries have taken a variety of approaches to bitcoin taxation and the application of VAT rules.While some seek to apply VAT to all digital currency sales, others simply ignore them, leaving them unregulated in terms of taxation, or apply capital gains or corporate tax on trading or mining profits.

The EU has been looking into digital currencies for some time, but apart from several consumer warnings and opinions, its response has been slow and there is still no push for legislative uniformity across the region.Earlier this year, however, the European Banking Authority (EBA) warned financial institutions against getting involved in the digital currency space until the industry is regulated.Back in March, the European Central Bank (ECB) reiterated its previous position on digital currencies, saying that the new technology should not be ignored or dismissed.Finnish flag image via Shutterstock 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.The Finnish Central Board (CBT) of taxes today declared that exchanges were providing “banking services.” The commission rates charged by exchanges were, therefore, in accordance with the EU VAT Directive, exempt from VAT (Value Added Tax).

EU Directives, such as the VAT Directive, specify certain goals to be achieved by member states.The member states are granted considerable discretion as to how they will achieve these goals (see Article 288 of the Treaty on the Functioning of the European Union).“EU Regulations,” in contrast, specify both the goals and the means by which States must achieve them.bitcoin minimum payoutThe EU VAT Directive (Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax) applies to goods and services sold within the EU.bitcoin bieteIts aim is to harmonize VAT Law among EU Member States.bitcoin hmrcIt specifies that VAT rates must be within a certain range within all EU countries, but leaves it up to member states to decide where in the range their rates will fall.win free litecoin

Article 135(1) of the VAT Directive grants an exemption for all “financial services”.In their decision, the CBT concluded that exchanges are providing a financial service and are, therefore, exempt from VAT (per Article 135(1)).Finland’s position can be compared and contrasted with other EU countries.Also Read: Sweden Leads in Cashless Transactions Belgium’s Federal Public Service Finance (FPS) has declared that domestic digital currency transactions are exempt from VAT.litecoin price feedThe FPS’s reasoning was predicated on the view that Bitcoin was not “a legal means of payment” and therefore could not be subject to VAT.litecoin price forecastIt appears, however, that they may revise their ruling in the future.bitcoin get raw blockThe UK were yet more emphatic, declaring digital currency transactions to be VAT exempt.apple bitcoin rift

This is not the first pro-Bitcoin move that the UK has made recently.Earlier this year, Chancellor Osborne voiced his eagerness to make the UK a Bitcoin hub.Importantly, though, the VAT exemption declared by HMRC (Her Majesty’s Revenue and Customs) will not apply to transactions in which merchants provide goods and services in exchange for Bitcoins.The exemption will only apply to the fees charged on bitcoin-trading transactions.bitcoin map amsterdamOther member states have adopted more conservative positions.Poland now charges a rate of 23% on bitcoin trades.The director of the tax authorities reasoned that the sale of mined bitcoins was the provision of a service.And given that VAT Law applies to the sale of goods and services, the sale of mined bitcoins would be subject to VAT.In Estonia, adopting a position in diametric opposition to that of Finland, the authorities did not regard the provision of alternative payment instruments as an exempt financial service.

Article 135(1) of the EU VAT Directive exempts financial services from VAT throughout the EU.Hence, for any given member state, the issue of whether bitcoin trading should be regarded as a “financial service” is a crucial one.If it is regarded as such by the relevant authority, then it will be VAT exempt.If it is regarded as merely “the provision of a good or service,” then it will be subject to VAT.A Swedish national has recently asked the European Court of Justice (the “Supreme Court of the European Union”) for a “preliminary ruling” that could have wide-reaching ramifications for all EU member states.In the Preliminary Ruling Procedure, the ECJ provides an authoritative and final interpretation of EU Law.The final decision in the case in question is, however, left to the referring court (in this case, Sweden’s Supreme Court).Thus, the law may be interpreted in favor of the complainant, but the complainant may still be deemed to lose by the referring court.This procedure is designed to ensure consistency in the way that EU law applies across EU Member States.