Crypto-currencies - Taxing Matters
| Author | James Normington |
| Pages | 131-139 |
13 Crypto-currencies –
Taxing Matters
The hardest thing in the world to understand is the income tax.
Albert Einstein
Financially valuable digital assets, such as crypto-currencies, can be
exchanged, bartered, traded and/or transferred. The value of those
transfers of ownership has attracted the attention of taxing authorities in
multiple jurisdictions, including in England and Wales. This has led to
much consideration and detailed reports on how to accommodate crypto-
currencies within the existing taxation legislative framework administered
by HM Revenue & Customs. Depending upon the circumstances, it
therefore follows that the probate practitioner may find that they have to
consider income tax, capital gains tax and inheritance tax as they relate to
crypto-currency holdings, along with the relevant case law, particularly in
the case of value added tax. This chapter explores each type of tax and
the implications of each to holdings of crypto-currencies.
13.1 Value Added Tax
We turn first to the case law, which derives from the bitcoin exchanging
activities of Mr Hedqvist, a Swedish national. Mr Hedqvist asked for a
decision from the Swedish Revenue Law Commission to establish whether
Value Added Tax (VAT) needed to be paid on the purchase and sale of
crypto-currency units. This was, in turn, referred to the Fifth Chamber
for consideration and examination of the meaning of goods and services
under the VAT Directive,1 Article 2(1).2 In common with cases in the
1 Council Directive2006/112/EC of 28 November 2006 on the common system of
value added tax [2006] OJ L 347/1.
2Case C-264/14Skatteverket v David Hedqvist [2015] ECLI:EU:C:2015:718. The
Supreme Administrative Court at para 21 referred two questions to the court:
(1) Is Article 2(1) of the VAT Directive to be interpreted as meaning that
transactions in the form of what has been described as the exchange of virtual
currency for traditional currency and vice versa, which is effected for
consideration added by the supplier when the exchange rates are determined,
constitute the supply of a service effected for consideration?
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting