Bitcoin entrepreneurs and digital currency enthusiasts in the European Union (EU) have spoken out following the European Court of Justice’s (ECJ) proposal for bitcoin’s exemption from Value Added Tax (VAT).
Formulated by the court’s Advocate General Juliane Kokott, the opinion provided a long-awaited answer to the question of whether VAT should be applied to bitcoin purchases and sales.
Despite Spain’s Ministerio de Hacienda clarifying its stance on bitcoin transactions earlier this year, Alberto Gomez Toribio was still optimistic about the proposal and the possible implications for his business.
The CEO of Spain-based bitcoin exchange Coinffeine told CoinDesk:
“The Advocate General puts forward a very sensible argument: VAT is a form of tax that is applied to consumer goods and it therefore makes no sense that it should be applied to the transmission of bitcoin as there is no final consumer. Bitcoins are destined to be eternally transferable and act as a form of payment.”
Coinffeine, he said, would remain unaltered if the proposal was ever signed into law.
“Our business model would remain unaffected as we don’t store bitcoin nor fiat,” he said.
Indication of things to come
Some entrepreneurs in the European space speculated that the Advocate General’s opinion would have far-reaching implications for the continent and likely become the standard for how countries approach taxing digital currencies.
Speaking to CoinDesk, Filip Godecki, CCO at Polish bitcoin exchange Bitcurex, said of the decision:
“Such an opinion of the EU’s Advocate General is a very good sign. Business thrives best when the law is clear. Bitcoin’s exemption from VAT is crucial for companies and ordinary people who want to be full scale users of bitcoin payments – which is its prime and natural function.”
“We are looking forward to seeing an official decision regarding this issue, but as the EU legislative history shows, Advocate General’s opinion is often a precise forecast of upcoming official regulations,” he added.
As previously reported, Poland imposed a 23% VAT on bitcoin mining profits, but its position on bitcoin exchanges continues to remain unclear.
Twitter reaction
Twitter was also awash with comments following the publication of the proposal.
Erik Vorhees, CEO of instant bitcoin and altcoix exchange ShapeShift.io – previously critical of New York’s BitLicense – celebrated the opinion released by the ECJ’s Advocate General.
Positive ruling/advice from EU!! No VAT on bitcoin exchanges! https://t.co/ycHN1GHfCp #BTC #finance #cryptocurrency
— Erik Voorhees (@ErikVoorhees) July 16, 2015
The opinion, however, was also well received by bitcoin entrepreneurs elsewhere. John Collins, a policy and public affairs officer at Coinbase urged EU member countries to pay attention to the exemption.
Excellent news from the ECJ regarding VAT exemption of bitcoin http://t.co/NpSb9Z8Q0G Countries should take note
— John Collins (@JohnCollins) July 16, 2015
Legal opinion
Legal experts from across Europe also reacted to the news.
Alejandro Gómez de la Cruz, tax lawyer and CEO of Law & Bitcoin said in a blog post:
“We have been waiting for a long time for a clarification issued by the ECJ relating to the application of the VAT exemption to bitcoin transactions… In my opinion, the most important matter behind this issue is that if the ECJ accepts the arguments of the Advocate General, the VAT exemption would be applicable in the whole European Union, including those countries (Estonia and Poland) which stated the contrary [applied VAT to bitcoin transactions].”
Similarly to de la Cruz, Esteban van Goor, a tax advisor, praised the proposal and reflected on the implications for the bitcoin community.
He told CoinDesk:
“In my opinion Advocate General Kokott did a great job in describing the VAT treatment of the exchange of bitcoin into fiat and vice versa. It is positive for the bitcoin community that a case like the one at hand is addressed by the Advocate General and the ECJ. ”
“The ECJ may also provide guidance in relation to other possible VAT related discussions pertaining to bitcoin, such as bitcoin mining,” he added.
EU flag image via Shutterstock.