Spain exempts bitcoin from VAT
- 28 June 2015 | Richard Asquith
Spain is the latest country to exempt virtual currencies from VAT with the General Directorate of Taxes confirming that sales of bitcoins were exempt from Spanish Value Added Tax.
Countries that have already exempted bitcoin transactions from VAT include: UK, Germany, Switzerland and Singapore. A number of countries, including Sweden and Poland disagree, and have made all transactions taxable. The European Commission is currently reviewing the treatment of the private currency, and is expected to rule by the end of 2015.
This treatment places virtual currencies under the category of ‘other negotiable instruments’ of the EU VAT Directive. Such transactions are considered a financial services and are not subject to VAT. At the time of the last major reform of the EU VAT system in the 1970s, the member states could not agree on the transaction of banking and insurance so left them VAT exempt. There was an attempt as recently as 2010 to introduce a Financial Services VAT Directive, but it failed due to lack of agreement on the treatment of outsourced services.