Landmark EU Bitcoin Ruling

October 23, 2015

London - The Court of Justice of the European Union on 22 October 2015 ruled that services such as bitcoin should be exempt from value added tax in all 28 EU countries, and should be treated the same as other transactions involving bank notes and coins.

David Hedqvist, the Swedish taxpayer seeking to provide a service for the exchange of digital currency bitcoin with other traditional currencies without paying value added tax, was represented by Swedish law firm Mannheimer Swartling. The firm’s team was led by Fredrik Berndt, who also participated in the proceedings before the Court of Justice of the European Union. Arun Birla of Paul Hastings in London assisted with the substantive aspects of the submission.

Fredrik Berndt comments, “We are pleased that the court was convinced by our argumentation that these services should be treated as financial services from a VAT perspective and that bitcoins should not be treated differently than other currencies in this respect. This is a recognition of bitcoins that may have an effect on other legal areas.”

“The CJEU’s ruling that bitcoins are exempt from VAT raises interesting issues on a global level,” said Arun Birla. “For example, will non-EU jurisdictions which have VAT equivalent taxes (such as GST) be guided by this decision? However, it is clear that having a consistent approach to the tax treatment of Bitcoins across the EU will place it at the forefront of developments within the financial payments technology space.”

Further background on the case can be found here.

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