Bitcoin purchases will be exempted from Value Added Tax (VAT), according to the Swiss Federal Tax Administration, stating that such purchases do not constitute delivery of goods or services.
Such steps naturally found the way to bitcoin supporters as due to this statement it is more economical for them to buy or sell bitcoins in the country and boost the sentiment among them to regard bitcoin as currency not as a property. As mentioned by the President of Bitcoin Assocation in Switzerland, Luzius Meisser, ‘this is the most reasonable way to classify bitcoins in the context of VAT, and we are fortunate that the tax administration agrees with our view. Bitcoin is a currency, and thus should also be treated like a currency.’
Despite this positive approach for cryptocurrency community and lifting bitcoin’s attractiveness in Switzerland, the Alpine country is not the first one to come out with such steps. VAT-exemptions could be seen also in Germany, Belgium, UK or Spain. Even the EU directive motivated to exempt sales of payment and ‘other negotiable instruments’ from the tax.
Nevertheless, the EU directive is not that clear and provides space for wider interpretation, so it is easier for countries to set their course. Switzerland, albeit not being a member of the EU, took this step to confirm previous trend of VAT exemption. As Meisser added:
‘This has direct implications for all bitcoin companies with Swiss customers. They now know for sure that they do not need to charge VAT. However, it does not affect transactions of Swiss companies with foreign customers. In that case, VAT might still apply as the service is exported.’
Bitcoin’s VAT exemption oral hearing is due to take palce at the European Courts of Justice in Luxembourg on Wednesday, bringing more light to the question if bitcoin exchanges would be liable to pay tax on the fees that are charged to their users.
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