Submitted by: Submitted by vantiskywalker
Views: 10
Words: 4113
Pages: 17
Category: Science and Technology
Date Submitted: 02/22/2016 10:45 AM
Articles
European Union
Redmar Wolf*
Bitcoin and EU VAT
A relatively new phenomenon is the appearance
of cryptocurrencies with bitcoins as their most
prominent representative. In this article, the
author discusses the VAT aspects of the use,
exchange and mining of bitcoins under the EU
VAT system.
1.
Introduction to Bitcoin
Legislation often fails to keep pace with technological
developments. A recent example of regulators lagging
behind is the appearance of cryptocurrencies with bitcoins
as their most prominent representative. Since the EU VAT
Directive1 does not contain any provisions on cryptocurrencies, there is no certainty about the VAT aspects of this
new means of payment. In view of the amount of bitcoins
already in “circulation”, this issue definitely requires immediate attention.
Bitcoin2 is an open-source, peer-to-peer digital currency.
It is based on the principles of cryptography (communications through secure channels) for validating transactions and controlling the production of the currency
itself.3 Bitcoin was developed by a programmer (or group
of programmers) who used the pseudonym Satoshi Nakamoto and whose identity remains unclear. The unit of the
Bitcoin network is bitcoin or BTC (or XBT), which many
consider to be a currency or Internet cash.4 This digital
currency has no physical form but only exists as a balance
in an electronic bitcoin account (or “wallet”).
Bitcoins are not issued by states, banks or other financial institutions; they are generated by the Bitcoin software itself and can only exist within the Bitcoin system.5
Bitcoins are not pegged to any real-world currency. The
exchange rate is determined by supply and demand in the
market. There are several real-time exchange platforms for
buying and selling bitcoins.6
*
Prof. dr Redmar Wolf is Senior Counsel with Baker & McKenzie
Amsterdam and Professor of indirect taxes at the Faculty of Law of
the VU University Amsterdam.
1.
Council...