VAT treatment of Bitcoin and similar cryptocurrencies
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26th March 2014 the VAt People
HMRC have issued a Brief to confirm the provisional
VAT treatment of bitcoin and similar cryptocurrencies, which is as
from Bitcoin mining activities will generally be outside the scope of
the basis that the activity does not constitute an economic activity
purposes because there is an insufficient link between any services
and any consideration received.
by miners for other activities, such as for the provision of services
connection with the verification of specific transactions for which
charges are made, will be exempt from VAT under Article 135(1)(d) of
the EU VAT
Directive as falling within the definition of 'transactions, including
negotiation, concerning deposit and current accounts, payments,
debts, cheques and other negotiable instrumentsí.
3. When Bitcoin is
exchanged for Sterling or for foreign currencies, such as Euros or
VAT will be due on the value of the Bitcoins themselves.
4. Charges (in
whatever form) made over and above the value of the Bitcoin for
carrying out any transactions in Bitcoin will be exempt from VAT under
135(1)(d) as outlined at 2 above.
However, in all
instances, VAT will be due in the normal way from suppliers of any
services sold in exchange for Bitcoin or other similar cryptocurrency.
It is possible for
taxpayers to rely on the VAT treatment outlined below unless and until
announce any change of policy in the future.
Therefore, if any of your clients deal in or exchange
they should treat the supplies as outlined above. However, please call
helpline if you wish to discuss the VAT treatment in further detail.
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
North West of England. We work with a wide range of businesses
throughout the UK as well as assisting our accountancy colleagues to
unravel the thorny VAT issues for their clients. We are one of the UK's
largest and most comprehensive sources of VAT and Customs advice, our
consultancy team having over 140
years of experience in VAT and Customs
gained in either HMRC or a Big 4 accountancy practice environment.
Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.
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Article Published/Sorted/Amended on Scopulus 2014-04-01 09:10:29 in Tax Articles