On Thursday, 22nd of October, the European Court of Justice ruled that trading of Bitcoin and other digital currencies are officially exempt from VAT, which means that digital currencies are treated as fiat currency and customers should not be taxed when buying or selling them across all 28 EU member states.
According to the Financial Times, the EU Court of Justice said that Bitcoin transactions “are exempt from VAT under the provision concerning transactions relating to currency, bank notes and coins used as legal tender.”
“It’s very good news,” said Simon Dixon, CEO of Bnktothefuture.com. “If you were taxed on the exchange it would make it an inferior currency to other currencies, so the implications of it being treated as a currency are that it can free flow.”
The court was reviewing whether VAT should be charged on exchanges like the failed Mt. Gox that converted the digital currency into fiat currency while taking a transfer fee.
As said by lawyer Jonathan Rogers, the decision brings Bitcoin and other digital currencies closer to mainstream acceptance, and may lead to greater adoption in the wider financial and economic space.
“From a strategic perspective, this decision, which appears to ensure virtual currencies will be seen as cash, should be an opportunity for emerging forms of financial services & FinTech to get a shot in the arm – bringing growth and consolidation,” Rogers said. “Greater clarity can now emerge in the debate about how to regulate virtual currencies, leading to increased credibility and consumer confidence; in turn, virtual currencies will have a much greater critical mass in the financial services system.”
For instance, CEO of Nasdaq Bob Greifeld unveiled that the US exchange group will be using blockchain technology for corporate actions services on one of its European exchanges.
During his speech at the Financial News Awards for Excellence in Trading and Technology in London, Greifeld said that Nasdaq will be using the blockchain to better manage and streamline the proxy voting process, an initiative that will first be tested on its Nasdaq’s market in Estonia.