The Court of Justice of the EU (on 22/10/, C/14, DStR , ) decided that the exchange of Bitcoin into other currencies is covered by the VAT exemption for currencies. The FPS said that bitcoin trading transactions are currently exempt from VAT under Article 44 of the country’s VAT code, telling Belgacoin that should the determination be reversed, a. Jan 07, · In other words, someone can purchase an amount of Bitcoins and will not be charged VAT for that purchase. But when those Bitcoins themselves are used to make a payment, VAT is added to the total. In Sweden, using Bitcoins is considered a form of barter. In practice, that means that any trade involving Bitcoins consists of two transactions.
Vat on bitcoin tradingVAT treatment of Bitcoin & cryptocurrencies: Recent circular of the BMF
The issue in question is whether a government classifies Bitcoin as a currency or as a tradable property. Norway, for example, where Bitcoin is no longer seen as a currency, all Bitcoin transactions are exempt from VAT payment.
But it is only taxable when Bitcoin is used to make a purchase, not when the coins themselves are acquired. In other words, someone can purchase an amount of Bitcoins and will not be charged VAT for that purchase.
But when those Bitcoins themselves are used to make a payment, VAT is added to the total. In Sweden, using Bitcoins is considered a form of barter. In practice, that means that any trade involving Bitcoins consists of two transactions. The first is the purchase of a product from a business. That is accorded full VAT charges. The second is the purchase of Bitcoins from the individual. However, the agency did suggest that this exemption may only be temporary. The clarification comes at a time when many European countries are seeking larger guidance on the issue from the European Court of Justice ECJ as to whether digital currency exchanges need to pay VAT taxes on service fees.
The statements also mark the first time Belgium has provided insight into its policies on the issue. Belgacoin indicated that it is not clear if VAT applies to merchant-customer transactions.
Belgacoin said the decision removes a critical uncertainty for the company, which buys and sells bitcoin as well as a host of altcoins including litecoin, dogecoin and peercoin. The BMF considers the services provided by the exchange companies to be technical services which are in principle subject to VAT. However, if the exchange company buys the cryptocurrency from and sells it to the customer in its own name, any fees paid by the customer for this purpose are exempt from VAT Sec. If several exchange companies are involved in the purchase and sale of cryptocurrencies, the contractual relationships must be assessed on each level in order to ascertain whether the service provided is subject to VAT or not.
Steffen specialises in tax consultancy for banks and payment transaction companies, private clients as well as medium-sized companies and entrepreneurs. Among other things, he advises clients on the VAT implications of their business relations, corporate and estate succession planning for tax purposes, real estate tax law as well as international tax law. Your email address will not be published.
T Tax. Steffen Rapp Steffen specialises in tax consultancy for banks and payment transaction companies, private clients as well as medium-sized companies and entrepreneurs. Pingback: How to buy Bitcoin in Germany - Businessdaylight. Leave a Reply Cancel reply Your email address will not be published.
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