European court rules that Bitcoin transactions are liable for same taxes as typical currency
Bitcoin has received another boost in its quest for mainstream legitimacy after a top European court ruled that it qualifies for the same taxes as other forms of currency.
The European Court of Justice declared that the notorious cryptocurrency should be exempt from consumption taxes, just like other transactions of banknotes and coins, when users purchase or exchange real money for it.
This follows a request from Swedish tax authorities who had argued that Bitcoin transactions should not be covered by a European Union directive exempting currency transactions from value added tax (VAT).
“Those transactions are exempt from VAT under the provision concerning transactions relating to ‘currency, bank notes and coins used as legal tender’,” the ECJ’s ruling said, noting that Bitcoin should be treated as a means of payment, meaning it is protected under the existing VAT legislation.
Bitcoin has come under an increasing amount of scrutiny in recent times as its popularity continues to grow online, partly due to its use as a backbone for institutions such as the Silk Road, which have led to several run-ins with law enforcement services in the past.
The Bank of England also raised its suspicions about the use of Bitcoin last year, warning that the digital currency could pose a threat to financial stability in the UK should it see widespread adoption.
However, several major financial institutions have announced plans to work with cyptocurrencies such as Bitcoin as they look for a more digital-friendly approach.
Earlier this year, BNP Paribas joined Barclays in announcing that it would be testing the use of Bitcoin and blockchain technologies in the financial services sector.
Earlier this year, it was also reported that the NASDAQ stock exchange was also evaluating blockchain, the underlying technology behind Bitcoin, in order to see if it could be used in trading of shares in private companies.
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