VAT rates and supply exempt from tax

On 22 October 2015, the Court of Justice of the European Union decided in the Case C-264/14 that the article 2(1)(c) of the Council Directive 2006/112/EC of 28 November 2006 must be interpreted as meaning that transactions consisting of the exchange of a virtual currency (e.g. Bitcoin) for a traditional currency and vice versa, and for which a fee is charged, are considered provision of services for consideration within the meaning of that provision.

Transactions involving non-traditional currencies, i.e. currencies which are not legal tender, are nevertheless to be treated as financial transactions provided that the parties to the transaction accept these currencies as alternatives to legal tender.

The Court of Justice also held that the article 135(1)(e) of the Directive 2006/112 must be interpreted as meaning that the exchange of a virtual currency for a traditional currency, and vice versa, is exempt from VAT, similarly to the exchange transactions of traditional currencies.