EU Rules Bitcoin Is a Currency, Exchanges Are VAT-Exempt (thestack.com)

An anonymous reader writes with this snippet from The Stack: The European Union's Court of Justice (ECJ) has today ruled that Bitcoin is a currency, detailing exchanges that transfer traditional currencies into the crypto-coins for a fee are to be exempt from consumption taxes. Under the EU rule against value added taxes (VAT) on transfers of "currency, bank notes and coins used as legal tender," the new call presents an important boost for Bitcoin, erasing related costs for buying and using the virtual funds in Europe – one of the world's leading trading zones. That decision overrides other approaches previously taken by some of the member countries, which treated Bitcoin like an exchangeble commodity itself, rather than a medium of exchange.

Comments

Does VAT applies to Gold?

[140Mandak262Jamuna]

If gold bullion is still subject to VAT, exempting bitcoins would not be correct. If it is America the Gold Merchants Trade Association (if !exist create()) will sue to get the same exemption.

Re:Does VAT applies to Gold?

[flowerp]

According to this Wikipedia article, the EU countries have exempted Gold purchases from VAT
https://en.wikipedia.org/wiki/Taxation_of_precious_metals

I can confirm this for Germany, at least.

Re:Does VAT applies to Gold?

[ADRA]

Wait, you're telling me that profits from currency exchanges aren't considered capital gains? Yikes, no glaring obvious taxation holes there.... nope.

Still not legal tender

[Richard_at_work]

Just a note to clarify that this ruling does not make Bitcoin legal tender in the EU, as the rule simply applies to any currency which is deemed or defacto used as legal tender somewhere.

Its the EU financial law equivalent to the Full Faith and Credit Clause of the US Constitution - someone elses currency is not taxed any more than yours is.

Re:Still not legal tender

[serviscope_minor]

ust a note to clarify that this ruling does not make Bitcoin legal tender in the EU

Legal tender is a very strange thing. The largest legal tender amount in Scotland is the two pound coin. Neither Scottish bank notes or Bank of England bank notes are legal tender in Scotland.

Legal tender has a rather peculiar and specific meaning and covers not only the currency but the specific form of currency as well as the amount. For example, there's some limit (not sure. A pound?) above which copper coins cease to become legal tender in England (maybe the whole UK).

Legal tender is a rather specific thing in that a creditor cannot refuse repayment of a debt if paid in legal tender. They can accept repayment in things other than legal tender but they're not obliged to.

This means that creditors can't take the piss by refusing to accept 20 pound notes (in England, tough luck Scots!), and debtors can't take the piss by insisting on repaying a grand in coppers.

Re:Still not legal tender

[sexybomber]

"Take the piss" is a British slang term that means roughly the same thing as when we say "give someone shit".

Only double because single.

[SharpFang]

The coin dealer charges fee, service fee, etc are taxable, so you're paying for the coin, for the service, and tax on the service.

OTOH you can just pay for a hot-dog with a silver coin, and there would be no tax (other than normal sales tax).

I believe even the seller could give you the silver dollar as change for said hot-dog and no tax on that would appear (only on the hot-dog purchase).

It all changes though, if you want to charge $10 for a $1 coin... in this case it's not a currency exchange, it's an item trade.

What were Bitcoins for again?

[Impy the Impiuos Imp]

Be careful what you wish for. This will help open the way to a host of banking type regulations, especially about transparency and reporting.

Now, will there be further consequences

[SillyBrit]

If it has been declared a currency, then could that then trigger the same requirements for when trading in traditional currencies .... with anti money laundering requirements, proof of ID etc. Without looking at the details, I can see how this could well follow

Re:Now, will there be further consequences

[Anonymous Coward]

Most major bitcoin exchanges already comply with AML/KYC, and require some form of ID to prevent fraud.

the ruling itself

[Anonymous Coward]

http://curia.europa.eu/juris/document/document.jsf?text&docid=170305&pageIndex=0&doclang=en&mode=lst&dir&occ=first&part=1&cid=755724
reference:

JUDGMENT OF THE COURT (Fifth Chamber)

22 October 2015 (*)

(Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Articles 2(1)(c) and 135(1)(d) to (f) — Services for consideration — Transactions to exchange the ‘bitcoin’ virtual currency for traditional currencies — Exemption)

In Case C264/14,
REQUEST for a preliminary ruling under Article 267 TFEU, from the Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden), made by decision of 27 May 2014, received at the Court on 2 June 2014, in the proceedings
Skatteverket
v
David Hedqvist

Re:The more pertinent question for Europe is

[JonnyCalcutta]

Sorry, this is Slashdot. You want the Daily Mail comments section. Go back down there, turn right at Fox News and its the fourth website on the right.

Re:Fiat currency

[Crowd Computing]

Isn't bitcoin the most extreme of fiat currencies? A number with no physical value at all, not even worth the paper it's written on since it's not written at all.

I think you're using the term "fiat currency" as the opposite of gold and other commodities that have been used as money. According to Wikipedia and confirmed by various other online sources, fiat currency is any currency backed and regulated by government. Bitcoin is obviously not gold, but neither is it fiat money since its value isn't regulated nor directly influenced by any central government authority. The value of Bitcoin can of course still be manipulated by market forces or external events, such as a government ban on cryptocurrencies, but this is true of commodities as well.

Re:The more pertinent question for Europe is

[TeknoHog]

Bitcoin isn't debt-based like most fiat currencies, and it isn't inflated at all like fiat. So it should be a more natural fit for banking systems that don't involve interest.