Waiting for ECJ on VAT and bitcoin.

European Court of Justice will solve Case C-264/14 – Hedqvist on Thursday 22.10.2015 (http://curia.europa.eu/jcms/jcms/Jo1_6581/) about the equest for a preliminary ruling from the Högsta förvaltningsdomstolen (Sweden) lodged on 2 June 2014 — Skatteverket v David Hedqvist 2014/C 245/09

The questions referred are:

1. Is Article 2(1) of the VAT Directive (1) to be interpreted as meaning that transactions in the form of what has been designated as the exchange of virtual currency for traditional currency and vice versa, which is effected for consideration added by the supplier when the exchange rates are determined, constitute the supply of a service effected for consideraton?

2. If the answer to the first question is in the affirmative, is Article 135(1) to be interpreted as meaning that the abovementioned exchange transactions are tax exempt?

The Advocate General Julianne Kokott released her opinion (in French, English not available) on 16.07.2015, concluding that:

1) The exchange of a mere mean of payment in legal tender mean of payment and vice versa, based on the fact that the supplier integrates the fee during the determination of exchange rates, constitutes a supply of services under Article 2 , paragraph 1, letter c) of the VAT Directive.

2) Such operations are exempt from tax under Article 135, paragraph 1, letter e) of the VAT Directive.

Art. 135 (1) lett. e) od the directive 122/2006/EC states:”Transactions, including negotiation, concerning currency,bank notes and coins used as legal tender, with theexception of collectors’ items, that is to say, gold, silver orother metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest“.
The position of the Advocate General is in line with Swedish Ruling considering bitcoin as “currency” under a VAT perspective.

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