The European Court of Justice exempts Bitcoin from VAT

The European Court of Justice (ECJ) has decided that Bitcoin transactions will be exempt from VAT. The Court considers that bitcoin transactions „are exempt from VAT under the provision concerning transactions relating to currency, bank notes and coins used as legal tender.”, according to a press release.

The ECJ’s top legal advisors, like Advocate General Juliane Kokott, had already recommended the exemption in july.
The ECJ had to first deal with a request regarding the tax status on exchange commissions and margins which came from David Hedqvist. He asked Swedish tax authorities for an advanced decision on VAT about exchange of bitcoin into Swedish Krona and vice versa. The Swedish tax authorities answered it should be VAT taxable, thus Hedqvist took it to court and evne to appeal, and as all VAT law flows from Europe, the appeal court passed the case on to the ECJ.

This decision represents a very positive news for European bitcoin exchanges and the whole industry.
The ECJ ruling has a bullish effect on bitcoin trading prices, which advance more than +2.5% on all major USD based exchanges, and almost +3% vs EUR, to be traded above $275 and €241.

Indeed, bitcoin is now regarded as a „pure payment method”, this will put bitcoin on a level playing field with fiat currency which may be essential for the growth of bitcoin adoption, its community and businesses. Also, non-EU countries might follow the ECJ ruling and implement similar legislation in their own tax laws, making the international approach to taxation and bitcoin even more harmonized.

Commenting on the ruling, Michael Kent, CEO & Founder of Azimo declared: „The fact that the EU court is even ruling on whether bitcoin should be VAT exempt or not is another big step forward in recognition for digital currencies. Doubts still remain around anonymity and security, which have so far prevented more widespread adoption, but following bitcoins commoditisation in the US, I’m not surprised the EU Court’s move to rule.
If the EU follows this decision up with plans to regulate bitcoin that will be the real game-changer.”