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Author Topic: VAT on BTC exchange  (Read 1275 times)
Pixie
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May 21, 2011, 09:41:49 AM
 #1

Anybody have an ideas of the VAT situation in UK/EU of BTC to GBP and vice versa?

I will ask the company's tax advisor if I went into it, but just wondering what the view of others are before, as I expect he will look blankly at me for a while...

My gut feeling is that exchanging GBP for BTP is selling (you give me money and I give you BTC codes), so VAT should be paid with VAT receipt. Buying BTC of UK/EU businesses would mean that have to charge VAT and provide a VAT receipt.

Any thoughts?
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galaxyAbstractor
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May 21, 2011, 10:18:26 AM
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Anybody have an ideas of the VAT situation in UK/EU of BTC to GBP and vice versa?

I will ask the company's tax advisor if I went into it, but just wondering what the view of others are before, as I expect he will look blankly at me for a while...

My gut feeling is that exchanging GBP for BTP is selling (you give me money and I give you BTC codes), so VAT should be paid with VAT receipt. Buying BTC of UK/EU businesses would mean that have to charge VAT and provide a VAT receipt.

Any thoughts?

I don't know how it is in the UK, but here in Sweden, you don't have to pay VAT if you are selling something between persons, unless the trade exceeds 50000 SEK (£4800). That's what the Swedish IRS office told me when I asked how and if I should pay VAT on stuff I sell on ebay-like sites. If it's from a company though, I am unsure, but I would guess that could be counted as taxable (I don't know how much though, it's 25% in Sweden), but it's better to wait for someone more knowledgeable to reply :>

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Clipse
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May 21, 2011, 11:30:40 AM
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As far as I know if you want to remain a legit tax payer then sales TAX would apply aswell as income TAX.

Of course this assumes you sell and withdraw to your bank immediately where they can trace the incoming money earned/gained.

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ribuck
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May 21, 2011, 02:10:42 PM
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The VAT registration threshold in the UK is currently £73,000 per year. Most money services are exempt. After all, if you go in to the bank to get change for a £10 note, you would be miffed if they charged you £12 (equal to £10 + VAT) for those coins.

I have no idea how Her Majesty's Revenue & Customs would regard BTC exchange.
davout
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May 21, 2011, 02:20:55 PM
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The VAT registration threshold in the UK is currently £73,000 per year. Most money services are exempt. After all, if you go in to the bank to get change for a £10 note, you would be miffed if they charged you £12 (equal to £10 + VAT) for those coins.

I have no idea how Her Majesty's Revenue & Customs would regard BTC exchange.

If VAT is charged on currency exchange, it would logically be charged only on the comission part, not the whole thing.

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May 21, 2011, 03:56:15 PM
 #6

Anybody have an ideas of the VAT situation in UK/EU of BTC to GBP and vice versa?

I will ask the company's tax advisor if I went into it, but just wondering what the view of others are before, as I expect he will look blankly at me for a while...

My gut feeling is that exchanging GBP for BTP is selling (you give me money and I give you BTC codes), so VAT should be paid with VAT receipt. Buying BTC of UK/EU businesses would mean that have to charge VAT and provide a VAT receipt.

Any thoughts?

For MtGox we had to do something complex, as when you trade you are not exchanging with someone (you'd need to know their identity), but you exchange with us directly. Accepting funds from various places (Europe, US, and more to come) has made this problem complex, and the situation we have found is easy: when you add funds to MtGox from Europe (for example), the European company only escrows your funds as a service, and you still deal with our company in Japan. The escrow fee is collected from you (the 2% withdraw fee) and paid by Tibanne Japan to the French company on withdraw.
The same kind of setup is used for the US company.

As for Japanese users there are not many at this point, however we "offer" 5% automatically to those, and get our funds back on the other side of the trade as tax refund. That's not really practical however and can end costing money if there are more buys than sells. I am working on a solution for this.

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