Switzerland exempts bitcoin from VAT
- Jun 17, 2015 | Richard Asquith
Switzerland is to become the latest European country to exempt the trading of digital currencies, such as bitcoin, from VAT.
The decision, to be made public by the Swiss Federal Tax Administration, underlines the view of the majority of tax administrations that virtual currencies are private money for the exchange of goods and services. They are therefore VAT exempt products as with all financial services in the European Union and most other countries.
The UK took the same line in 2014 after initially attempting to tax the currency as single use voucher in 2013. Other countries such as Germany and Spain view bitcoin as a currency too. Although no country has gone the full step of accrediting virtual currencies as full currency.
Countries such as Poland, Estonia and Sweden have levied full VAT on any dealings of the currency, which adds huge costs onto any dealings. Sweden has referred the taxation of bitcoin to the European Commission for a review. Its conclusion should be published by the end of 2015.
Bitcoin tax in AsiaPac
In Asia Pacific, countries such as Singapore have exempted bitcoins from Goods & Services Tax, the local version of VAT. However, Australia has levied its full 10% GST on trading.
Aside from indirect taxes, gains in the holding of bitcoin are subject to income tax on the realisation of the gain. This would mean personal income tax or corporate income tax for individuals and companies, respectively.