Purchasing and selling Bitcoin must not incur the sales tax, the European Court of Justice said, declaring that Bitcoin transactions are similar in nature to those of other “currency, bank notes and coins used as legal tender”.
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The Swedish authorities had argued that, because Bitcoin is not a real currency, the EU’s tax-free status for currencies should not apply.
The judgment came in response to a case prompted by a Swedish national seeking guidance from the Swedish tax authority, before opening an online Bitcoin exchange business.
The government released a report on the future of FinTech – European financial technology – saying: “Digital currencies such as Bitcoin have the potential to replace traditional currency and, by extension, the need for central banking and regulatory systems”. “It is important for businesses all over Europe that they finally have clear guidance regarding VAT and for a few this could mean that they will get money back from the tax office”.
“Today’s announcement is significant in that it brings Bitcoin and other block chain technologies closer to mainstream adoption”, said Paul Gordon, UKDCA board member.
The ECJ’s declaration that Bitcoin is effectively a currency is a victory for its advocates, especially after the US Commodity Futures Trading Commission last month said it was a commodity, meaning it needs stricter regulation.
Bitcoin proponents welcomed the launch of Gemini in October 2015, the first USA regulated Bitcoin exchange with Cameron and Tyler Winklevoss behind the helm.
This is good news Bitcoin, whose value has plummeted from its highs of more than $1,200 in 2014 to about $200 in January 2015, zigzagging in the $200-$300 price range ever since. “In fact, by any relevant benchmark, the value now at risk with bitcoin is just a drop of water in the ocean that is the financial industry”.
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Bader adds: “Digital services have created new challenges for governance, and slowly we are coming to terms with these issues”.
