Bitcoin transactions in the EU will be exempt from value-added taxation, ruled the European Union’s Court of Justice. This step is a milestone for many bitcoin businesses and investors, as it legitimizes the means of payment in Europe with similar credentials to traditional cash. The European Union’s Court of Justice effectively recognized bitcoin as a legitimate means of payment, putting it in the same league as other currencies for tax purposes.
The ECJ’s long-awaited ruling comes after a dispute between Sweden’s tax office, Skatterverket, which challenged a ruling that transactions should be exempt from value-added taxation. The ECJ Advocate General, Juliane Kokott, made amends to to urge the court to refrain from applying tax to bitcoin purchases and sales.
ShapeShift CEO Erik Voorhees shared the view that the ruling puts Europe in a position to fully capitalize on the nascent technology and the businesses that want to work with it.
He told CoinDesk:
“It’s refreshing to see politicians who aren’t taxing and regulating everything in sight. And [the ruling] is going to tip the scales further away from the US and toward Europe as the center of digital currency innovation.
Treating bitcoin as a currency rather than a commodity such as in the United States is important for a number of reasons. By removing value-added taxation, bitcoin can flow freely between other currencies and is not subject to sales tax when transferred. With this ruling, many of the top bitcoin businesses in Europe are breathing a sigh of relief.
The ruling is “the first step in securing bitcoin’s future as a genuine alternative to national currencies,” said Richard Asquith, vice president at tax compliance firm Avalara.
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