LONDON — Europe’s top court has ruled that purchasing bitcoin through exchanges will not be subject to value added tax (VAT) in a decision that has far-reaching implications on the continent for the viability of the world’s most popular cryptocurrency.
The European Court of Justice ruled Thursday that digital currencies like bitcoin should be treated in the same way as fiat currency and consumers should not be taxed when trying to buy or sell them. The Financial Times reports the ECJ said bitcoin transactions “are exempt from VAT under the provision concerning transactions relating to currency, bank notes and coins used as legal tender.”
The ruling comes after its Advocate General Juliane Kokott published an opinion in July urging the court not to impose tax on bitcoin sales and purchases. “I therefore propose that the Court should reply…[that] these operations are exempt from tax under section 135, paragraph 1, point e) of the VAT Directive,” Kokott said.
The case was brought before the court after Swedish man David Hedqvist sought to set up a bitcoin exchange in his home country allowing people to buy and sell bitcoin using Swedish krona. The Swedish Tax Authority referred the issue of whether bitcoin exchanges should be