Topic: Crowdfunding legal costs for case at the EU Court of Justice about Bitcoin/VAT (Read 4621 times)

did you get any sponsorship or donations from other exchanges which wish to in future or already do operate in EU.

I have posted a new update about the case.

tl;dr

• Germany and Estonia argued against VAT exemption.
• The EU commission argued in favor of VAT exemption. Their submission also included the "preliminary view" of the UK, also in favor of exemption.
• I have the possibility to request an oral hearing (but there might be an oral hearing anyway). If there is an oral hearing I'll need to raise more funds.

Hedqvist here. It is correct that the dispute in Sweden between Skatteverket and Skatterättsnämnden was regarding the fees. The person from Skatteverket responsible for the appeal made that very clear in a comment in a news article (in Swedish).

Roughly translated: "Our goal is not to add VAT to bitcoins, but there could possibly be VAT on the exchange fee".

BUT, in the last few days I have heard that there is an opinion among lawyers and other experts that "questions referred to the CJEU are formulated so broadly, that they could be interpreted as also pertaining to the sale of bitcoins as such". I don't have the expertise to have an opinion on that, but if that is true it sure makes the case even more important.

It's a waste of time for laymen in this thread to try to sort out the directive and the outcome of this case, it doesn't work like that.

My point is that the court will make their decision based not primarily on the actual wording of the directive, but on other things such as argumentation, the EU's basic values​​, the possible implications of the specific and other cases, political agendas, symbolic values ​​and arbitrary discretion. In order to even get a point across you need first and foremost a law degree and secondly immense experience of EUCOJ litigation.
Of course, the discussion is interesting, but I would rather see people focusing on where they can actually make a difference: funding. DH has received just over 1.6 BTC and he will probably need closer to 100 BTC.

And it can also be fatal to blindly trust a professional. If it is important, you cannot get around understanding it yourself.

It's a waste of time for laymen in this thread to try to sort out the directive and the outcome of this case, it doesn't work like that.

and as for your post about services. services are not automatically classed as VAT rateable, you are completely wrong about that. the actual classifications is when a service "adds value" to a good

(c)
the supply of services for consideration within the territory of a Member State by a taxable person acting as such;

EG
a bank handing you money is a service, but it does not add valueto money simply because a person hands you money at a bank teller desk, rather than an ATM or vice versa..

It is more subtle than that. The VAT directive defines "‘Supply of services’ shall mean any transaction which does not constitute a supply of goods". However, "transaction" is earlier defined as supply of a good or service (article 2). Thus, all the directive says in the end is that "transactions" = "supply of goods or services", without defining more closely what a service is.

It boils down to the question what the service is, that a Bitcoin exchange provides. The reasonable interpretation is that the service an exchange provides just consists of the matching of buyers and sellers. Thus, VAT should only apply to that service, and not the exchanged amounts. Similarily, ebay only charges VAT on its fees, and not the value of the traded goods.

Now, what makes this all so confusing, is that there are exemptions for financial services such as running an exchange, which raises the seperate question of whether VAT applies to the fees or not.

Yes and "services" if basically defined by "everything that can be billed and does not end with the delivery of goods".

No it is not.
Nothing is "out of scope" of VAT. Some things are exempt from VAT if and only if they are on the list of "things that are exempt from VAT".

Bitcoin is not on that list, so by default, VAT applies at the standard rate.

 If you're registered for VAT, you have to charge VAT at the standard rate on all goods and services you supply, unless they fall into one of these categories:

    zero-rated
    reduced-rated
    exempt from VAT
    outside the scope of VAT

When VAT mustn't be charged

VAT is not charged (so it can't be reclaimed) on goods and services that are:

    exempt from VAT
    outside the scope of VAT

VAT must also not be charged by a business that isn't registered for VAT.

No it is not.
Nothing is "out of scope" of VAT. Some things are exempt from VAT if and only if they are on the list of "things that are exempt from VAT".
Bitcoin is not on that list, so by default, VAT applies at the standard rate.

So ... do I understand correct: it's not about VAT on the Bitcoin-Purchase (1000€ + 200€ VAT) but about VAT on the fee (10€ + 2€)? If this is it, it seems not a subjects of legal discussion that everyone who earns money with a service has to pay VAT on his income.

Yes, that was the disagreement in Sweden between Skatterättsnämnden and Skatteverket, whether VAT should be applied to the commission or not.

So ... do I understand correct: it's not about VAT on the Bitcoin-Purchase (1000€ + 200€ VAT) but about VAT on the fee (10€ + 2€)? If this is it, it seems not a subjects of legal discussion that everyone who earns money with a service has to pay VAT on his income.

Request for a preliminary ruling from the Högsta förvaltningsdomstolen (Sweden) lodged on 2 June 2014 — Skatteverket v David Hedqvist

(Case C-264/14)

Language of the case: Swedish

Referring court

Högsta förvaltningsdomstolen

Parties to the main proceedings

Applicant: Skatteverket

Defendant: David Hedqvist

Questions referred

Is Article 2(1) of the VAT Directive 1 to be interpreted as meaning that transactions in the form of what has been designated as the exchange of virtual currency for traditional currency and vice versa, which is effected for consideration added by the supplier when the exchange rates are determined, constitute the supply of a service effected for consideration?

If the answer to the first question is in the affirmative, is Article 135(1) to be interpreted as meaning that the abovementioned exchange transactions are tax exempt?

Article 2
1.   The following transactions shall be subject to VAT:
(a)
the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
(b)
the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i)
a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;
(ii)
in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person;
(iii)
in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);
(c)
the supply of services for consideration within the territory of a Member State by a taxable person acting as such;
(d)
the importation of goods.

Article 135
1.   Member States shall exempt the following transactions:
(a)
insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;
(b)
the granting and the negotiation of credit and the management of credit by the person granting it;
(c)
the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;
(d)
transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;
(e)
transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest;
(f)
transactions, including negotiation but not management or safekeeping, in shares, interests in companies or associations, debentures and other securities, but excluding documents establishing title to goods, and the rights or securities referred to in Article 15(2);
(g)
the management of special investment funds as defined by Member States;
(h)
the supply at face value of postage stamps valid for use for postal services within their respective territory, fiscal stamps and other similar stamps;
(i)
betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State;
(j)
the supply of a building or parts thereof, and of the land on which it stands, other than the supply referred to in point (a) of Article 12(1);
(k)
the supply of land which has not been built on other than the supply of building land as referred to in point (b) of Article 12(1);
(l)
the leasing or letting of immovable property.

So is the question only about whether (a) or (b) applies?