European Court of Justice to Issue Bitcoin VAT Decision Soon

A long-awaited decision on whether bitcoin exchanges in Europe will need to pay value-added tax (VAT) is due on Thursday.

     The decision marks the end of a debate on whether services for buying and selling bitcoin should be subject to VAT. The decision was prompted by Swedish resident David Hedqvist, who was planning to start a bitcoin business and asked for clarification on the taxation of bitcoin.

     A Swedish court later found that such activity should be exempt from VAT, according to a decision by the national tax authority, Skatterverket, and the European Court of Justice was eventually called in to resolve the issue.

     Although the court has not yet made a decision, early signs suggest that it may support the exemption of VAT. In July this year, court advocate Juliane Kokott proposed that Bitcoin exchanges be exempt from VAT. At the time, industry stakeholders and the wider community cheered the move.

     Observers believe that the resolution goes beyond specific issues and may affect European Bitcoin users and stakeholders in the industry.