Topic: Crowdfunding legal costs for case at the EU Court of Justice about Bitcoin/VAT - page 2. (Read 4613 times)

@D.H. can you clarify the following question:

Assume your business sells 2 BTC to me for 1000€ and that the VAT rate is 20%. Furthermore, you charge a transaction fee of 10€. Do I need to actually pay

(a) 1010€, consisting of 1000€ + 10€ fee
(b) 1012€, consisting of 1000€ + 10€ fee + 2€ VAT on fee
(c) 1212€, consisting of 1000€ + 10€ fee + 202€ VAT on everything

What most seem to fear is case (c), which would indeed be catastrophic. I don't understand the legalese of the English question, but the German translation of the question to the court only asks about case (b).

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

Edit: after reading it again, it seems even more subtle: the German version asks whether case (c) applies in cases where the exchange adds an implicit fee to the exchange rate. I.e. the real exchange rate is 1:500, but the exchange is giving you 1:505, thereby embedding the fee in the exchange rate. Of course, there is a chance that the court will go further and also hint at the answers to other questions. But the question itself seems to be very narrow and specific.

bitcoin is "out of scope" of VAT

thats the simple answer, and i hope your team can acutely explain why, the UK tax office HMRC listened to reason and took on board details given to them. so if the EU system is similar where they have certain 'test' scenarios that help them to determine bitcoins scope, then they should come to the same results. so i hope your team knows what 'test' scenarios the EU tax department use on new inventions to determine if its VAT categorized or remains 'out of scope'.

goodluck, and do not be afraid to contact the tax offices and ask them millions of questions. they are not that bad

Good advice, thanks.


Actually, the EU isn't proposing anything. In Sweden there was disagreement between Skatterättsnämnden (government agency that give advance rulings in tax questions) and Skatteverket (the tax authority) on how to interpret Article 135(1) in the EU directive on VAT. They were in agreement that exchanging Bitcoin <-> traditional currency was not "consumtion" so they didn't suggest to add VAT to the bitcoins but Skatteverket believes that it should be added to commission taken by e.g. exchanges.

So, the EU court will now decide exactly how to interpret the directive regarding Bitcoin.

sending an email/posting a forum topic asking for money in the first post is a ALWAYS going to look like a money grab. so try to formulate a message that mentions the mission/campaign and the details of the court case that can be verified. add a draft of what basic result you seek from the court (EG. NO VAT and to treat bitcoin merchants as bureau de change, rather then retailers of VAT categorized products)

the thing that i find odd is that the EU is even proposing to categorize bitcoins as a VAT rateable product. yet using UK guidelines say bitcoin by its very nature is a raw invention that does not 'add value' to anything that bitcoin was created using.

EG a raw carrot is not VAT categorized product. but if it was 'prepared' and packaged which adds value to the carrot. then the prepared / packaged result is VAT categorized. so i hope your team are good at drafting an explanation that bitcoin is not a final product that has a added value.. because a bitcoin is a bitcoin is a bitoin. there is no before, there is no after. it is raw.

anyways. try to draft a post/mail that talks about the campaign, and the details, and ask them if they are interesting in endorsing the campaign, to contact you back.

simple money begs dont get people interested so dont be too eager to throw a bitcoin address in their face at first contact.

also, i do not mean to contact coinbase/bitpay for endorsments par-say. what i man is to look at their list of partners (merchants) and find ones that are based in your country.

coinbase has 35k
bitcoin has 30k
coinmap and many other places, including the market place sub forum here lists many merchants. so seek them out. you may even find that some of these businesses can offer more than just funding.

Yes, I think that you're right about that. Anyone who can point me to the right person to reach out to at such businesses, please send me a PM or an e-mail. I'm afraid that it'll be lost as spam if I start sending what looks like begging e-mails to info@bitpay, info@bitstamp etc.

general 'user' donations wil be small. i would look at coinmap/bitpay/coinbase merchants and other services listings pages to find bitcoin business in your country, and ask them to help endorse your campaign

100 businesses donating just 1 btc each is alot easier than trying to ask 10,000 users to donate 0.01 each especially when that $500 per business could potentially save that business thousands later.

Update 26th of August

I have great news! One donor (who wants to remain anonymous for now) has agreed to cover all costs for the written submission that is due in a few weeks. This made it possible for me to hire Mannheimer Swartling, a very reputable Swedish law firm with the necessary experience of the EU court as well as VAT questions related to financial institutions. This means that I am not looking for more funds at this point. We will assess the financial situation again if and when there is an oral hearing coming up. At that point it might be necessary to raise more funds.

Big thanks to everyone who has contributed so far! (money, legal assistance, contacts etc. – I have received a lot of friendly e-mails and phone calls this past week).

I now have a lot of contacts that can offer insight into the situation in other EU countries. I will pass this information on to my lawyer and we will of course try to learn as much as possible about the legal status in other countries but there won't be time to talk to everyone. There is one thing that everyone in other EU countries can do to help and that is to lobby your own government! All EU countries have the oppurtunity to intervene in the case and the more countries we have on our side the better.

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Original post

As some of you may already know there is an ongoing case regarding Bitcoin and VAT exemption in Sweden and the EU. The Supreme Administrative Court (“Högsta förvaltningsdomstolen”) has now requested a preliminary ruling from the EU Court of Justice. The case, C-264/14, can be found here and has been covered quite a lot in media (Bloomberg, Law360, CoinDesk).

I got involved in this simply by asking for an advance ruling in Sweden because I wanted to start selling bitcoin on my site bitcoin.se. It has now escalated and I find myself in a situation where my case will likely decide if and how VAT should be applied to Bitcoin throughout the EU.

It took me a while to realize the significance of this case and I have to appoint a top law firm team here in Sweden that can prepare a written submission (and we’re short on time here - this has to be done in 3 weeks) as well as a potential oral hearing later on. The Swedish counsel will also cooperate with interested parties throughout Europe to get input and support from other European countries if deemed necessary. I am currently discussing with teams at three of Swedens top firms in VAT and EU-law. After asking about the costs I have received fee estimates that range from 22 000 to 38 000 EUR (approximately 56 to 96 bitcoin at the time of writing).

So here is my problem. There is no way that I can finance this personally. I don’t have enough commercial interest in the case to throw all of my savings on it, the business that we wanted to start on bitcoin.se has not been launched so there is no money there. This is why I am now reaching out to the Bitcoin community.

Disclaimer: Donating is in no way a guarantee that we will win the case but if I can’t raise the money the risks are dramatically increased that I will lose since I will have to deal with the court proceedings on my own (which one of the parties I have discussed the case with has described as “catastrophical” for Bitcoin in Europe).

If the donated money is in excess of the costs I will donate the excess funds to Bitcoin organizations in Europe. If, for some reason, none of the funds raised are used I will return all bitcoins to the sender address (so make sure that you donate from an address that you control!)

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Please send your donations to this Bitcoin address:
(no more donations necessary at this point)
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About me
My name is David Hedqvist and have been running bitcoin.se since early 2012. I am a moderator of the Scandinavian forum section at bitcointalk.org and I have also been a moderator at bitcoin.stackexchange.com since its launch.

I will post this message on bitcoin.se, on bitcointalk.org where my name is D.H. and on Reddit where my name is D_H_. If you read about the case on curia.europa.eu or in media you can confirm that the case is about David Hedqvist and bitcoin.se. Feel free to send me a PM or an e-mail to [email protected] if you have any questions.

You may also contact Dr. Thaer Sabri ([email protected]), Chief Executive of Electronic Money Association, to confirm the legitimacy of this fund raiser.