Business Law Magazine , a German publication, reviewed a European Court of Justice ruling exempting bitcoin from value added tax (VAT) which was hailed as a victory by bitcoin advocates. The article by attorney Heinz Zimmermann noted that bitcoin has seldom been the focus of analyses addressing taxes.
In presenting the court’s decision, the article reviewed the history and workings of bitcoin. Citizen Sought Clarification
The case was between the Swedish Tax Authority and the nation’s Revenue Law Commission. It commenced after a Swedish citizen asked for clarification of VAT on bitcoin, CCN reported. That national, David Hedqvist , sought to open a bitcoin exchange. He operated Bitcoin.se, a Swedish bitcoin information site. Several European bitcoin companies helped pay for Hedqvist’s lawyers. Advocate Evaluates Facts
Juliane Kokott, German Advocate General at the Court of Justice of the European Union and a professor at the University of St. Gallen, evaluated and analyzed the facts to prepare the subsequent court decision. In her final opinion of July 16, 2015, she examined the question if the exchange service planned by the Swedish entrepreneur should be treated as a taxable remunerated service. She noted the transfer of bitcoins does not fulfill a taxable act.
She also pointed out the transfer of legal payment instruments did not meet the requirements of a fact subject to VAT. In a national economy, payment instruments should only have the purpose of facilitating the exchange of goods.
Kokott concluded that this finding should also be valid for other payment instruments whose function was also exhausted through their respective use. She referred specifically to the principle of tax neutrality as a principle of equality.
The transfer of bitcoins as such would therefore not fulfill a taxable fact.
Arguments from Germany about bitcoins’ lack of stable value and susceptibility to fraud is not convincing, […]
