Making stock exchange transactions for the purchase and sale of bitcoins is not a business activity (judgment of the Supreme Administrative Court of August 19, 2021, reference number I FSK 590/18)
The case concerned an entity that purchased virtual currency (bitcoins) in 2011 and 2013 and then sold them in 2013. Transactions were carried out on the stock exchanges in Poland, Japan and Great Britain, and due to the specific nature of the exchanges, bitcoin was sold to anonymous buyers. This entity made a total of several thousand transactions as part of one hundred and several dozen orders, but did not register a business activity, and did not report to the tax authorities any transactions for the purchase and sale of bitcoins.
The tax authorities took the position that the trade in bitcoin is a service subject to VAT and made in the course of business activity, which was challenged by the court of first instance. The first-instance court pointed out in particular that, despite the number of transactions and the fact that their purpose was to make a profit, the applicant’s activity could not be attributed to features of permanence and regularity, or to features of organization. As a result, the court of first instance found that its activities do not constitute economic activity within the meaning of the VAT Act and fall within the scope of managing private property.
The Supreme Administrative Court, agreeing with the assessment of the first instance court, dismissed the body’s cassation appeal. In its oral justification, the Supreme Administrative Court also stressed that the transactions were not made continuously. Moreover, the Supreme Administrative Court pointed out that the circumstance concerning the execution of several thousand transactions results from the fact that a specific number of units was assigned to one order, and thus the number of transactions alone is not an appropriate measure.
Source Deloitte
