The much awaited European Court of Justice’s decision regarding the application of VAT on buying and selling bitcoin over bitcoin exchanges is finally out. Initial reports indicate that the European Court of Justice has decided in favor of bitcoin and the ruling states that bitcoin should not be taxed at exchanges.
The report was initially carried by Bloomberg Business and later taken up by other news outlets including Business Insider. The European Court of Justice was asked to take upon the case by Swedish authorities after the country’s tax administration – Skatteverket declined to accept the Swedish court’s similar ruling. The Swedish court had ruled earlier that bitcoin trading over exchanges should be exempted from VAT while responding to a policy clarification request filed by one of the Swedish residents.
The European Court of Justice’s ruling has been welcomed by the bitcoin community across Europe. Even before the court’s decision was announced, there were speculations that the ruling will be in favor of bitcoin, but there was no way to be sure about it. The court’s ruling states the bitcoin exchanges are exempt from VAT under the provision concerning transactions relating to currency, bank notes and coins used as legal tender.
The bitcoin community was concerned about the European Court of Justice’s ruling going against bitcoin, which might have resulted in bitcoin prices going up. Earlier, the Court Advocate General, Juliane Kokott had mentioned that VAT should not be applicable for bitcoin exchanges and the European Court of Justice seems to have agreed with her view towards bitcoin transactions over the exchanges.
The new ruling serves as a sign of bitcoin gradually being accepted as an alternative currency by the governments and judiciary. This will mean that there is a fair chance for bitcoin based businesses to start offering bitcoin services similar to those currently offered by conventional banks and financial institutions across the world.