Earlier this week, the European Court of Justice decided to exempt bitcoin transactions from Value Added Tax (VAT).
In so doing, the court effectively recognized bitcoin as a legitimate means of payment in Europe, putting it in the same realm as other currencies for tax purposes.
The ruling comes months after court advocate general Juliane Kokott said the court should refrain from applying tax to bitcoin sales and purchases in an opinion published in July.
Europe’s highest law court first began looking into bitcoin taxation in June last year after the Swedish tax office challenged a court decision which ruled that transactions in the digital currency should be exempt from VAT, following a dispute with Daniel Hedqvist, a forum operator who at the time wanted to establish a bitcoin brokerage.
Unsurprisingly, the court’s ruling was well-received by exchange operators in Europe, some of whom told CoinDesk that the decision is a positive step for both the business of buying and selling digital currencies and the technology as a whole.
‘A big milestone’
Some operators saw the event as a watershed moment for bitcoin in Europe. Filip Godecki, COO at Poland-based Bitcurex, predicted that the decision will help reduce barriers to greater adoption of the digital currency.
“This Court decision is a nod