Love Bitcoin? Well we’ve got some good news for you – it’s officially exempt from value-added tax in Europe.
The European Union’s top court has ruled that Bitcoin transactions should not be subject to VAT.
Today’s ruling comes courtesy of the European Court of Justice, which made the point that Bitcoin should be classed as a currency, not a commodity.
“The Court...holds that [Bitcoin] transactions are exempt from VAT under the provision concerning transactions relating to ‘currency, bank notes and coins used as legal tender’,” reads the press release.
This is a huge boost for the European Bitcoin economy, as individuals won’t have to suffer higher costs for buying or using the virtual currency.
“Many with a vested interest in cryptocurrencies will be overjoyed by the ruling,” says Jens Bader, chief commercial officer of Secure Trading.
Bader continues: “It is easy to see why an unregulated currency not subject to sovereign states taxes is an enticing prospect.”
Related: What is Bitcoin?
However, Bader says that it’s “a shame” to see the ECJ “cave in” on this issue.
“The question of whether or not Bitcoin should be subject to VAT is a simple one – if it is considered a currency it shouldn’t be subject to VAT and if it is considered a product it should be,” argues Bader. “In my mind, Bitcoin is not a currency. It is an exchangeable product – but a product nonetheless – and for that reason I am surprised by the ECJ’s ruling.”
He continues: “The distinction lies in the fact that Bitcoin exchanges, and cryptocurrency exchanges like it, are not regulated and licensed financial services. While we call it a ‘currency’, in fact Bitcoin is a tradable commodity, like gold and silver. Where currencies come under a highly regulated framework, tradable goods do not, which means that their value is always in flux. The bottom line is that Bitcoins are products attributed and traded for a value, and nothing more.”
Bader adds: “Digital services have created new challenges for governance, and slowly we are coming to terms with these issues.”
Do you think Bitcoin should be treated as a currency or a commodity? let us know in the comments.
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