Jane Genova wrote an article on PaymentWeek.com about the EU deciding on whether or not to tax Bitcoin transactions. Earlier in the year Sweden asked for the EU to rule on whether or not Bitcoin should be taxed. The UK has ruled no valued added tax on Bitcoin.
From the article:
The European Court of Justice will rule if bitcoin transactions are subject to its value-added tax rules (VAT).
If that top court decides to impose VAT regulations on member nations with bitcoin businesses, they could suffer an economic setback. Others could miss out on the opportunity to establish business initiatives associated with bitcoin. VAT is one way the EU raises tax revenues. It’s essentially a consumption tax, paid by buyers as part of the purchase price.
That case before the Court is C-264/14 Skatteverket v David Hedqvist and it raises the issue: Do transactions between cryptocurrencies and traditional currencies fall under VAT regulations?
As with all tax policies, this one could wind up actually lessening government revenue by weakening economic momentum. Much of the recovery in the EU has been sluggish.
Any nation such as Denmark which classifies bitcoin trading – both gains and losses – as exempt from taxation can be at a competitive advantage in attracting investors. That taxation policy might even motivate investment firms and serious investors to relocate to that country.
In the US, for example, bitcoin investments are taxed. The law also requires that foreign accounts be disclosed.
Read the full article here