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Bitcoin exchange granted tax-free status in Europe

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Bitcoin and other virtual currencies can be exchanged tax free in Europe, just like traditional currencies, following a ruling by the EU Court of Justice in Luxembourg.

The Swedish tax authorities had argued that crypto currencies should not be covered by the European Union Directive that currently exempts currency transactions from VAT or sales taxes. But the court’s ruling now affords digital currencies like Bitcoin the same tax-free standing as traditional currencies throughout the 28 countries of the EU.

According to Michael Kent, CEO and founder of digital money transfer company Azimo, the Court of Justice ruling is a big development in the wider acceptance of crypto currencies.

“The fact that the EU court is even ruling on whether Bitcoin should be VAT exempt or not is another big step forward in recognition for digital currencies,” says Kent. “Doubts still remain around anonymity and security, which have so far prevented more widespread adoption, but following Bitcoins commoditisation in the US, I’m not surprised the EU Court's move to rule."

On Wednesday, Jersey announced plans to introduce the regulation of digital currencies, and Kent believes that a similar move by the European Union, would transform the outlook for Bitcoin and other crypto currencies.

“If the EU follows this decision up with plans to regulate Bitcoin that will be the real game-changer,” he says. “Otherwise while crypto currencies’ low costs and faster speeds of exchange have huge potential, it’s the backend blockchain technology that we’ll first see go mainstream speeding up the international delivery of funds in place of services like SWIFT for financial institutions and corporations alike.”

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