The European Court of Justice ruled on Thursday that Bitcoin and other virtual currencies can be exchanged tax-free, reports Bloomberg.
The order follows a dispute in Sweden that arose last June between the nation’s tax authority and Bitcoin forum operator Daniel Hedqvist over whether cryptocurrencies should be granted tax-free status in the country.
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The court ruled:
“Transactions to exchange traditional currencies for units of the bitcoin virtual currency (and vice versa) constitute the supply of services since they consist of the exchange of different means of payment.”
It also noted that excluding such transactions from the tax exemptions given to traditional exchanges “would deprive it of part of its effects,” since the exemption’s aim is to counter “the difficulties connected with determining the taxable amount and the amount of VAT deductible.”
In July, the court’s Advocate General said in an opinion document that Bitcoin operations should be exempt from Value Added Tax (VAT).
The decision spells a big win for Bitcoin adopters, as it means that people in Europe can buy Bitcoin with fiat currency without paying taxes on their purchase. It makes a strong case for using cryptocurrencies for international transactions.
➤ EU’s Top Court Rules That Bitcoin Exchange Is Tax-Free [Bloomberg]