- The Lower Saxony Finance Court addressed the VAT treatment of trading with Non-Fungible Tokens (NFTs) for the first time.
- The plaintiff, a sole trader, dealt with NFTs linked to digital image files as collectibles in 2021.
- NFT sales were conducted via the OpenSea platform using smart contracts, trading only a blockchain database entry.
- Transactions were recorded on the blockchain with pseudonymized crypto wallet addresses.
- The plaintiff argued that his NFT sales were not subject to VAT as buyers were not identifiable.
- The tax office disagreed and subjected all sales to the standard VAT rate of 19 percent.
- The court partially upheld the plaintiff’s appeal.
- The court ruled that the plaintiff provided other services, not deliveries, to buyers, not to OpenSea.
- The pseudonymization of wallet addresses did not negate the service provision.
- The plaintiff failed to prove that buyers were entrepreneurs.
- Services provided to non-entrepreneurs were considered electronically supplied services.
- The plaintiff did not fulfill his obligations to determine the residence or location of buyers.
Source: blogs.pwc.de
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.
