European Gaming Lawyer magazine Spring 2016 | Page 16

CJEU: Bitcoins transactions are VAT
exempt!
The CJEU now ruled that transactions
“which consist of the exchange of traditional
currency for units of the ‘bitcoin’ virtual
currency and vice versa, in return for
payment of a sum equal to the difference
between, on the one hand, the price paid by
the operator to purchase the currency and,
on the other hand, the price at which he
sells that currency to his clients, constitute
the supply of services for consideration7.”
The judgment clarifies that this exchange
is in fact a service against remuneration
where the remuneration is not equal to
the value of the exchanged bitcoins but
only equal to the realized margin/spread
in return for the exchange. Moreover, the
CJEU decided that this margin is exempt
from VAT, since “Article 135 para. 1 lit. e of
the VAT Directive also covers the supply of
services […] which consist of the exchange
of traditional currencies for units of the
‘bitcoin’ virtual currency and vice versa.”
The CJEU thereby accepts that bitcoins fall
within the meaning of the above art. 135
VAT Directive because they are a means of
payment. By applying the VAT exemption
rule on the exchange of bitcoins, the use
of bitcoins as means of payment has been
facilitated by the CJEU.
But what does this mean for
payments with bitcoins and what are the
consequences for the igaming operator
who wants to convert hard-earned bitcoins
into hard-currency?

Bitcoin payments not subject to VAT
The question of VAT taxability first arises
when bitcoins are used as payment for
services, such as online gambling services.
As an example, the German tax authorities
assume that the payment of services via
bitcoins results in two supplies, i.e. (1)
the obvious taxable supply of the service
[