The European Court of Justice has ruled in a case which it sought to establish whether the purchase of Bitcoin is equivalent to buying a service normally taxed with VAT. The case stemmed from a disagreement between the Swedish tax authority, and a Swedish citizen identified as Daniel Hedqvist, operator of a forum and Bitcoin exchange service. When the tax authority Skatteverket tried to apply VAT to Hedqvist’s operations with Bitcoin, he argued that the tax measure was not covered by European law.
The issue has previously caused discrepancies between member countries of the EU. For example, the United Kingdom applies an exemption from VAT in Bitcoin transactions, while other countries, such as Germany -and in this case Sweden- are in favour of the tax.
Being the leading European court, the ruling sets a precedent in all 28 EU member countries, thus eliminating any possibility of taxing such transactions in the future. The ruling is final, it takes effect immediately in the European Union, and can only be reversed by a change in EU law.
Being a large group of countries, the ruling sets an important precedent on the overall application of VAT to transactions in Bitcoin and other similar services worldwide.
