Bitcoin Cryptocurrency Exempted by the Highest Court in Europe from VAT
Bitcoin, the really first cryptocurrency was introduced in 2009 by group of programmers. It gained the attraction of merchants with legal products but it has been also used by some for illegal transactions because cryptocurrency is a way of transferring money anonymously.
Last year, the European Banking Authority said that banks should not buy, sell or hold any virtual currencies / cryptocurrency until regulators develop safeguards to protect their integrity.
However, there is no stopping in cryptocurrency’s popularity. This year there was a case filed in the highest court of Europe with regards to paying Value Added Tax or VAT in exchanging currency transactions. This issue had been heard by EU Court of Justice for several months and has come to a recommendation at last about Bitcoin and Cryptocurrency.
Bitcoin and cryptocurrency rules by European Union Court of Justice
European Union Court of Justice ruled that Bitcoin and cryptocurrency should be exempted from VAT. This recommendation was based on the provision that concerns currency, coins, bank notes transactions where they were used as a legal tender. This was ruled a month after United States ruled Bitcoin and cryptocurrency to be regulated and classified as a commodity.
Bnktothefuture.com CEO, Simon Dixon said that “If you were taxed on the exchange of Bitcoin and cryptocurrency, it would make it an inferior currency to the other currencies, so the implications of it being treated as a currency are that it can free flow”. The ruling made Bitcoin and other cryptocurrencies in equal footing as the other currencies.
Before that, Swedish confused with regards to Bitcoin and VAT, thus asking for clarification. Tthe case was opened and held by Revenue Law Commission against Swedish Tax Authority.
It was all started when David Hedqvist, Swedish, starts a Bitcoin to other currency exchange and vise versa online and many European Bitcoin companies back him up. They even covered the cost of David’s lawyers. EU Court of Justice sided with David and agrees that the transaction shouldn’t be charged because it is just an exchange of different means of payment. Now, Hedqvist is operating Bitcoin.se, a Swedish information site for bitcoin and Cryptocurrency.
Bitcoin and cryptocurrency in Australia and United Kingdom
Australia and United Kingdom already exempt Bitcoin and other cryptocurrencies from VAT before it was followed by the European government. This is after their thorough investigation about the cryptocurrency.
Cryptocurrency and BItcoin – What Has learned the EU
European Union learned that cryptocurrency, specifically bitcoin is growing fast from the previous 37-pages report published by ECB or European Central Bank which was titled “Virtual Currency Schemes – A Further Analysis”. This report aims to study the risk involving this cryptocurrency. From the time it was written 500 cryptocurrencies has been creted and 69,000 transactions are happening everyday in the world using bitcoin in particular. Though, it has no match with 274 million non-cash transactions (retail payment) per day solely in Europe, it is still considered as a large number.
Vice-President of Tax Compliance Firm Avalara, Richard Asquith said that the decision of EU highest court in making bitcoin cryptocurrency exchange transaction tax-free is the first step in making bitcoin and cryptocurrency’s future secured as an authentic alternative to other worldwide currencies.
London – Center of Bitcoin Cryptocurrency Trading
In this case, what happened does not only secure Bitcoin’s position as a currency but it also boosts the United Kingdom’s effort to make London as the center of bitcoin cryptocurrency trading. Also, it was last year when UK wants to make bitcoin trading VAT-free. The future seems shining for the cryptocurrency industry!