Hedqvist bitcoin value
The ECJ stresses that to interpret this provision as including only transactions involving traditional currencies would go against the context and aims of article 1 e VAT Directive as transactions involving non-traditional currencies that have been accepted by the parties to a transaction are also financial transactions.
Applied to this case, the bitcoins exchange has no other purpose than to be a means of payment. With this decision, the ECJ laid out a positive future for bitcoinpurchases at bitcoin-exchanges in Europe. Following this decision, Europeans can continue to buy bitcoin with traditional currency without paying tax.
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They specialise in tax law, loan finance and environmental law respectively. Mr Hedqvist did not intend to charge a fee for this service but rather to derive a profit from the spread i. Questions were referred to the CJEU on whether such exchange transactions constitute a supply for VAT purposes and if so, would they be exempt. The Court also ruled that the exchange of traditional currencies for non-legal tender such as Bitcoin virtual currency and vice versa are financial transactions and fall within the exemption under Article 1 e of the VAT Directive.
HMRC will not apply any changes retrospectively. However, in all instances, VAT will be due in the normal way on any goods or services sold in exchange for Bitcoin or other similar cryptocurrency. The value of the supply of goods or services on which VAT is due will be the sterling value of the cryptocurrency at the point the transaction takes place. To help us improve GOV. It will take only 2 minutes to fill in. Before he did this he wanted clarity as to the VAT position of his new business.
This led to the Swedish courts asking the European court for clarification. Unsurprisingly this decision confirms that an exchange of Bitcoin for a traditional currency is a supply of services.
Whilst this decision is confined to the activities of a Bitcoin exchange, there seems to be no reason why it would not equally apply to other virtual currencies provided such currency has no purpose other than to be a means of payment.
There are differences in the relevant words in the VAT Directive between the different language versions. Given this linguistic uncertainty the court sought to interpret the words in the context it is used, and in light of the aims of the VAT Directive. It is worth noting that legal tender is a surprisingly narrow concept.
For example, Scottish currency is not legal tender. It would seem strange if Bitcoin were treated differently to Scottish pounds. The impact of this decision on Bitcoin exchanges will depend upon who their customers are. Where a Bitcoin exchange transacts with other businesses, the right to levy VAT belongs to the state in which the counterparty rather than the Bitcoin exchange belongs.