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Author Topic: Bitcoin and VAT in the EU  (Read 19345 times)
lonelyminer (Peter Šurda)
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June 11, 2012, 06:24:01 AM
 #41

The German UStG lists exceptions in §4. In Abs. 8 it lists certain financial services. However I do not see the connection between KWG + ZAG on one hand and UStG on the other. Merely because it looks like they use the same terms, the does not necessarily mean they use the same definitions.
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2weiX
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June 11, 2012, 07:00:59 AM
 #42

The German UStG lists exceptions in §4. In Abs. 8 it lists certain financial services. However I do not see the connection between KWG + ZAG on one hand and UStG on the other. Merely because it looks like they use the same terms, the does not necessarily mean they use the same definitions.

The problem is that noone is sure where to put bitcoin.

currency?
good?
financial instrument?
commodity?

it can be all of that, that's why we love it.
and that's what makes it hard to qualify as either OR.
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June 19, 2012, 11:32:14 PM
 #43

can't you just do the invoice and other official documents in euros, with the bitcoin amounts "For information only", and say that your customer paid in euros through the company MtGox (for instance) like he would have done through Paypal? Let's just say that the money doesn't reach you until MtGox makes a bank wire


(change euro for £,etc, )
lonelyminer (Peter Šurda)
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August 16, 2013, 04:00:22 PM
 #44

Just a quick update. The office of Frank Schäffler (a member of the German parliament) forwarded me a letter from the German finance ministry dated last week, which says that Bitcoin is not VAT exempt according to §4. In Abs. 8 b UStG, confirming my previous worries. Their main argument is that BTC is not recognised as a legal tender in any country. Even though the letter does not explicitly say whether other exemptions apply, I suspect they don't. So be careful when trading BTC as a VAT registered company in Germany.
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August 16, 2013, 06:44:33 PM
 #45

Forcing people to pay VAT when selling bitcoins is practically equivalent to forbidding official exchanges and pushing every exchange either to another jurisdiction, or to the black market.

I really hope they don't actually try to enforce what they told you, and that they eventually come to their senses and change their stance.

18rZYyWcafwD86xvLrfuxWG5xEMMWUtVkL
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August 16, 2013, 06:49:09 PM
 #46

Regulations are coming and pirateat40 was just the beginning of the government's PR campaign.

Tips: 1A1SSSg3i54E2g8cAQJ1FCEZFvFvWYbcxA
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Hermel
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August 18, 2013, 01:10:52 PM
 #47

Just a quick update. The office of Frank Schäffler (a member of the German parliament) forwarded me a letter from the German finance ministry dated last week, which says that Bitcoin is not VAT exempt according to §4. In Abs. 8 b UStG, confirming my previous worries. Their main argument is that BTC is not recognised as a legal tender in any country. Even though the letter does not explicitly say whether other exemptions apply, I suspect they don't. So be careful when trading BTC as a VAT registered company in Germany.

This is indeed bad news. However, there is hope. Let's have a quick look at what §4 Abs 8 b says:

Quote
b) die Umsätze und die Vermittlung der Umsätze von gesetzlichen Zahlungsmitteln. Das gilt nicht, wenn die Zahlungsmittel wegen ihres Metallgehalts oder ihres Sammlerwerts umgesetzt werden,

"Gesetzliche Zahlungsmittel" refers to official currencies. As long as there is no country that makes Bitcoin an officially accepted currency, this section does help Bitcoin being exempt from VAT.

However, there is another section just below (§4 Abs 8 d). It says:
Quote
die Umsätze und die Vermittlung der Umsätze im Einlagengeschäft, im Kontokorrentverkehr, im Zahlungs- und Überweisungsverkehr und das Inkasso von Handelspapieren,

This corresponds to Article 135 d of the VAT directive, which exempts the following from VAT:
Quote
transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;

Here, it clearly says that payments and transfers ("Umsätze im Zahlungs- und Überweisungsverkehr") are exempt from VAT. The question now is: do Bitcoin transfers and Bitcoin payments qualify as payments and transfers in the sense of this directive?

My hope is that this is indeed the case. I'm Swiss and Switzerland has basically the same clause in its law. I know a VAT tax expert who will provide me with the official comment to the law, which hopefully contains further hints.

Residing in Switzerland? Then write me to join the Bitcoin Association Switzerland - the local chapter of the Bitcoin Foundation.
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August 19, 2013, 06:14:52 PM
 #48

I hope some trolling lawyer will try to actually get a VAT refund for exported bitcoins. If this attempt will fail, bitcoin becomes VAT-proof Smiley

Of course I gave you bad advice. Good one is way out of your price range.
jedunnigan
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August 19, 2013, 06:54:05 PM
 #49

Posted this on reddit, but it's relevant here as well:

Honestly people have been [relatively] positive about this move by Germany, but I don't think people understand the implications quite yet.

As I see it, this is an indirect attempt to put the brakes on a system of payment processing that has far lower fees then competing systems (credit cards) and is therefore a threat to their survival. This tax heavily favors traditional payment mechanisms (Bitcoin's no-tranaction fee just went out the window), no question. That or Germany is afraid to call it a currency as such, in fear of providing too much legitimacy to the protocol, thus they stuffed it in the only other bucket it could be seen fitting: commodity (aka unit of account). This is why new legislation must be written, simply because it doesn't fit anywhere else... all preexisting laws reduce its accessibility/attractiveness on some level.

There is always the possibilities that they don't completely understand the repercussions of such a ruling, but I doubt it.
edmundedgar
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October 12, 2013, 05:11:03 AM
 #50

Just a quick update. The office of Frank Schäffler (a member of the German parliament) forwarded me a letter from the German finance ministry dated last week, which says that Bitcoin is not VAT exempt according to §4. In Abs. 8 b UStG, confirming my previous worries. Their main argument is that BTC is not recognised as a legal tender in any country. Even though the letter does not explicitly say whether other exemptions apply, I suspect they don't. So be careful when trading BTC as a VAT registered company in Germany.

This is indeed bad news. However, there is hope. Let's have a quick look at what §4 Abs 8 b says:

Quote
b) die Umsätze und die Vermittlung der Umsätze von gesetzlichen Zahlungsmitteln. Das gilt nicht, wenn die Zahlungsmittel wegen ihres Metallgehalts oder ihres Sammlerwerts umgesetzt werden,

"Gesetzliche Zahlungsmittel" refers to official currencies. As long as there is no country that makes Bitcoin an officially accepted currency, this section does help Bitcoin being exempt from VAT.

However, there is another section just below (§4 Abs 8 d). It says:
Quote
die Umsätze und die Vermittlung der Umsätze im Einlagengeschäft, im Kontokorrentverkehr, im Zahlungs- und Überweisungsverkehr und das Inkasso von Handelspapieren,

This corresponds to Article 135 d of the VAT directive, which exempts the following from VAT:
Quote
transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;

Here, it clearly says that payments and transfers ("Umsätze im Zahlungs- und Überweisungsverkehr") are exempt from VAT. The question now is: do Bitcoin transfers and Bitcoin payments qualify as payments and transfers in the sense of this directive?

My hope is that this is indeed the case. I'm Swiss and Switzerland has basically the same clause in its law. I know a VAT tax expert who will provide me with the official comment to the law, which hopefully contains further hints.

So this piece
http://www.welt.de/finanzen/article120823372/Zahlungen-mit-Bitcoins-sind-umsatzsteuerfrei.html

...linked from this Reddit thread
http://www.reddit.com/r/Bitcoin/comments/1o7ldb/wow_bitcoin_no_sales_tax_payment_in_germany/

...seems to say that everything's good?

Is this a confirmation of Hermel's speculation that although the sale of Bitcoins isn't VAT-exempt by virtue of being an official currency, it's instead VAT-exempt by virtue of being a means of payment or something?
2weiX
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October 12, 2013, 06:44:00 AM
 #51

What this means is that it works like EVERYTHING else in trading:

If you buy a crate of apples and pay in oranges, you do not pay VAT on the ORANGES, you pay VAT on the APPLES.
The article explicitely states that "When using BTC as a MEANS OF PAYMENT, that PAYMENT is VAT-exempt" - NOT the goods you are buying!

For whatever reason they had to clarify this is beyond me.
edmundedgar
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October 12, 2013, 06:57:55 AM
 #52

What this means is that it works like EVERYTHING else in trading:

If you buy a crate of apples and pay in oranges, you do not pay VAT on the ORANGES, you pay VAT on the APPLES.
The article explicitely states that "When using BTC as a MEANS OF PAYMENT, that PAYMENT is VAT-exempt" - NOT the goods you are buying!

For whatever reason they had to clarify this is beyond me.


I don't think that's right. Conventionally if you sell me a crate of apples and I pay you in oranges, IIUC there are effectively two taxable transactions going on: I'm selling you oranges, and you're selling me apples. So you have to charge me VAT on the apples I'm buying from you, and I have to charge you VAT on the oranges you're buying from me. (The way VAT works we may also get VAT credits that may cancel out, but that's a different issue.)

This is different from what happens if you sell me a crate of apples and I pay you in Euros. So the question was whether bitcoins were going to be treated like oranges or like Euros. Common sense obviously says they should be treated like Euros (or at least like a foreign currency) but it wasn't clear whether the letter of the legislation would allow common sense to apply here.
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