Bitcoin currency exchange not liable for VAT taxes: top EU court

A Bitcoin logo is displayed at the Bitcoin Center New York City in New York's financial district July 28, 2015. REUTERS/Brendan McDermid/Files

BRUSSELS (Reuters) - Exchanging traditional currency for the digital currency bitcoin online should be exempt from consumption taxes just like other transactions of banknotes and coins, the European Court of Justice said on Thursday.

Europe’s highest court ruled in response to a request by Swedish tax authorities, who had argued bitcoin transactions should not be covered by a European Union directive exempting currency transactions from value added tax (VAT).

The court ruled that bitcoins should be treated as a means of payment, and as such were protected under the directive.

“Those transactions are exempt from VAT under the provision concerning transactions relating to ‘currency, bank notes and coins used as legal tender’,” the ECJ concluded.

Reporting by Robert-Jan Bartunek; Editing by Tom Heneghan