Source: Btw Brief 2014/39
Author: Thomas van Ditzhuijsen and Niels Wenting

A Bitcoin is a digital payment instrument. The number of companies worldwide that accept Bitcoins is growing rapidly. The Bitcoin is also increasing in popularity in the Netherlands. The authors expect that the growing popularity of Bitcoins, or other comparable ‘crypto currencies’, is unstoppable. Although Bitcoins were already devised in 2008, the European VAT system does not yet have any specific rules for Bitcoins or similar means of payment.

In this article, the authors present a brief introduction of Bitcoins and analyze a number of transactions with Bitcoins, as well as their possible VAT consequences. On the basis of current European and Dutch VAT regulations and case law, the authors conclude that Bitcoins do not yet appear to qualify as money, but nevertheless advocate that Bitcoin payments should not be treated as a good or service for VAT purposes. According to the authors, the determination of the taxable base for businesses that accept Bitcoins for services they perform should not lead to any problems in practice.

The authors believe that it would be desirable for policy to be published at the European level about the VAT consequences of transactions in Bitcoins and similar crypto currencies in order to provide clarity about the implications for VAT.