Does Cryptocurrency to FIAT Exchange Impact VAT Deduction Rights?

• Cryptocurrencies are increasingly used in business transactions, but tax authorities struggle to understand their application.
• A ruling by the National Revenue Information Service highlighted differences between the tech sector and tax authorities.
• An IT company received payment in cryptocurrencies and believed the exchange was not subject to VAT.
• The company argued for a VAT exemption, claiming the exchange was an ancillary transaction.
• The tax authority disagreed, stating the exchange is a taxable service, exempt from VAT but not ancillary.
• The authority linked the exchange to the company’s core business, not considering it incidental.
• The CJEU ruled that cryptocurrency exchanges are services, not goods, and are subject to VAT if performed for consideration.
• A VAT exemption may apply to financial services involving virtual currency exchanges.

Source: mddp.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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