COPENHAGEN, July 16 Digital currencies like
bitcoin should be exempt from value-added tax (VAT), the legal
adviser to the European Union's highest court said on Thursday,
in a case that could set a rule across the bloc.
Sweden has asked the European Court of Justice to give it
guidance on the tax status of bitcoin, to end legal uncertainty
over the unit that is not backed or controlled by any government
or central bank.
The Luxembourg-based court, set up to make sure EU law is
applied equally across member states, is still considering the
application but often follows the advice of its
The business of exchanging bitcoin for other currencies
counted as a transaction which was exempt from duty under EU VAT
regulations, Advocate General Juliane Kokott wrote in her
Bitcoin-focused businesses welcomed her view, though the
court has not said when it will reach a final decision.
"It puts all bitcoin businesses onto solid legal grounds and
recognizes bitcoin as a legitimate medium of payment," Tim
Rehder, chief executive of London-based bitcoin marketplace
Cubits, told Reuters.
Sweden approached the court after David Hedqvist, a bitcoin
web-forum moderator, asked for a ruling on the issue in Sweden
because he wanted to start selling the digital currency.
"We're happy that the advocate general shares our assessment
and we hope that the EU court will share it as well," Hedqvist's
lawyer Fredrik Berndt told Reuters.
A few countries have brought in legislation covering
bitcoin, but have taken different approaches.
Australia has said transactions are liable to its goods and
services tax, while Britain has made them exempt from VAT.
(Reporting By Alexander Tange; Additional reporting by Jemima
Kelly in London; Editing by Sabina Zawadzki and Andrew Heavens)