In a far reaching ruling, the European Court of Justice (ECJ) has ruled that Bitcoin transactions are not subject to value-added tax (VAT).

Simply put the court ruled that “transactions to exchange a traditional currency for the ‘Bitcoin' virtual currency or vice versa” are not subject to VAT.

Simon Dixon, CEO of bnktothefuture.com, said: It's very good news. If you were taxed on the exchange it would make it an inferior currency to other currencies, so the implications of it being treated as a currency are that it can free flow.”

Specifically, the court said that to deprive Bitcoin exchanges from the tax exemptions given to traditional exchanges “would deprive it of part of its effects." In other words, the aim of the exemption is to oppose “the difficulties connected with determining the taxable amount and the amount of VAT deductible” in cases of taxation of financial transactions."

Source: SCMagazine