VAT treatment of virtual currencies and transactions – GERMANY



On 27th February 2018, the Germany‘s Federal Ministry of Finance (MOF) issued guidance clarifying the VAT treatment of bitcoins and other “virtual currencies.”


It determined that although transactions to exchange a traditional currency for a virtual currency and vice versa were deemed to be a “taxable supply” these transaction are considered to be VAT exempt.


The guidance confirms that Germany will not impose a VAT charge in circumstances where the virtual currency is a substitute for a traditional currency and is used merely as a form of payment.


This guidance is in line with the ruling of the Court of Justice of the European Union (CJEU)— Hedqvist (C-264/14, 22nd October 2015).

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