Bitcoin has already been hailed as the potential saviour of Greece during its time of crisis. As the calls for adoption of bitcoin gets louder, the digital currency is garnering support from unusual places. The recent one comes in the form of an opinion document published by the Advocate General of the European Court of Justice.
In the document, Juliane Kokott — Advocate General of the European Court of Justice has stated that exemptions should be made in Value Added Taxes (VAT) for bitcoin operations in European Union. The opinion document cites existing VAT exemptions for currency and money transactions in EU’s VAT Directive. This document, if accepted will pave the way for recognition of bitcoin as a legal tender in future.
Juliane has urged the European Court of Justice to consider bitcoin as a form of money, even though it is not a legal tender as it is being widely used for transactions across the world. She has asked the court to refrain from applying VAT to bitcoin sales and purchases.
The Swedish tax authorities had requested the court to look into the taxation regimen for bitcoin sales and purchase following a dispute between Daniel Hedqvist, a bitcoin forum operator and Skatterverket (Swedish tax authority). Earlier a court in Sweden had ruled against imposing VAT on bitcoin transactions in the country.
Many European countries have already exempted bitcoin transactions from VAT, and the Advocate General’s opinion falls in line with the official stance of these member nations. The interpretation of bitcoin as a form of financial service is in accordance to the European Union’s VAT Directive 2006/112/CE.
While bitcoin transactions are VAT exempt in Belgium, Spain, Switzerland and other European nations, few nations like Estonia have included VAT for the whole value of bitcoin trades. It may be withdrawn upon appeal in the ECJ in the near future.