VAT on transactions exchanging cryptocurrencies for traditional currencies and vice versa (comment on CJEU judgment 2)

The part of the judgment in which the Court held that transactions which consisted of the exchange of traditional currencies for bitcoin units and vice versa constituted the “supply of services” is relatively unremarkable. The “supply of services” and “supply of goods” are two main categories of economic activities taxable under the VAT Directive (Art. 2(1)). The Directive further provides, ‘“[s]upply of services” shall mean any transaction which does not constitute a supply of goods.’ (Art. 24(1)). Seen in this context, the notion of “supply of services” would hardly be expected to receive a narrow interpretation.

It may, however, be of interest to note that the European Court does not necessarily give the same meaning to a similar concept in different contexts. Thus, the Court once noted, “it is not necessary … to interpret the concept of the ‘provision of services’ set out in the second indent of Article 5(1)(b) of Regulation No 44/2001 in the light of the definition of the concept of ‘services’ in the Community directives on VAT” (Falco Privatstiftung and Rabitsch (Case C-533/07) (2009)). On that reasoning, the Court interpreted the concept of the “provision of services” narrowly for the purpose of the rules for determining the jurisdiction of courts of the Member States. In a future post, I intend to discuss whether a claim in matters relating to a contract for the exchange of cryptocurrencies with traditional currencies would fall within the “provision of services” under what is now Article 7(1)(b) of the Brussels I-bis Regulation and if so, how the provision is to be applied.

VAT on transactions exchanging cryptocurrencies for traditional currencies and vice versa (comment on CJEU judgment 1)

Hot on the heels of my analysis of the Advocate General’s opinion, the Court of Justice of the European Union gave its ruling yesterday.

It is noteworthy that the dispositive part of the judgment speaks solely of “the ‘bitcoin’ virtual currency” rather than using a more general expression like “a pure means of payment.” So the question I raised with the AG’s opinion would not arise under the judgment. It is a judgment specifically on bitcoin, though it does not mean that the possibility of a mutatis mutandis application of it to other cryptocurrencies is foreclosed.

So far as bitcoin is concerned, the Court embraced the opinion of AG. But there are some differences in their reasoning. Thus, AG noted that the Court had not previously ruled on the rationale of the exemption for currency and considered that its purpose is to ensure that, in the interests of the smooth flow of payments, the conversion of currencies is as unencumbered as possible. The Court, on the other hand, considered that the exemption is intended to alleviate the difficulties connected with determining the taxable amount and the amount of VAT deductible which arises in the context of financial transactions. The reasoning of AG seemed informed by a broad policy consideration while that of the Court is based on a technical consideration which is specific to the context of VAT. In the final analysis, neither AG and Court saw good reasons to differentiate bitcoin from traditional currencies with respect to the rationale to which each of them attributed the exemption.

VAT on transactions exchanging cryptocurrencies for traditional currencies and vice versa (comment on Advocate General’s opinion)

　ビットコインと法貨との交換は付加価値税(VAT)の対象となるサービスかどうかについて、2015年7月16日に、EUのKokott法務官の意見が出された(Skatteverket v David Hedqvist, Case C-264/14)。法務官意見には、EU裁判所の判断にも影響力があるが、英語の公定訳はまだ出ておらず、日本語では未紹介のようだ。
　本事件では、Hedqvist氏は、スウェーデンの法貨によるビットコインの販売と購入を行い、その交換レートの差を利益とする営業(したがって、取引所ではなく、販売所)を開始することにした。同氏がVATの支払義務を負うかについて、EUのVAT指令(2006/112)の解釈について、スウェーデンの最高行政裁判所がEU裁判所の判断を求めた。
　法務官は、このような交換は、原則としてVATが課税される「対価を伴うサービス」(Art. 2(1)(c))に当たるが、通貨に関する取引として課税が免除される(Art. 135(1)(e))と判断した。ここで言う「サービス」の内容は、交換であり、通貨の移転ではないとしている(paras.13,18)。また、ビットコインの保有目的は、支払手段以外にはない(para. 17)との前提に立っている。その上で、VAT指令の前記条文との関係では、支払手段である通貨を法貨と区別する理由はなく(paras. 15, 40)、ビットコインが良貨か悪貨かも関係ない(para. 44)と説示している。結論部分においては、ビットコインという固有名詞は使わず、「純粋の支払手段」という一般的な表現を使っている。他の仮想通貨について、どの時点で誰の判断を基準に「純粋な支払手段」であると評価することになるのか等々、興味は尽きない。

I have given above a short account in Japanese of Advocate General’s opinion as it is not known in Japan yet. The opinion contains a number of interesting remarks such as that the possession of bitcoins would be for no other purpose than for making payment and that it does not matter whether bitcoins are a good or bad currency.It is also notable that the advocate general did not use the word “bitcoin” in the conclusion but used a more general expression “pure method of payment.” Since there is a large number of altcoins, it is to be wondered who gets to decide whether any particular one of them constitutes a “pure method of payment.”