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VAT on Bitcoin mining

Bitcoin symbol

Taxation of income obtained by mining for Value Added Tax purposes.


In this article I will explain whether to consider VAT on mining operations, and to detail the opinion of the Court of Justice of the European Union on whether to charge VAT on the exchange of virtual currencies with each other or with traditional currencies.

Please remember that this article may be useful for citizens of the European Union and not necessarily of other countries. It is always useful and advisable to consult with your Tax Advisor.


1.- VAT on mining:

According to the Court of Justice of the European Union:


"Bitcoin mining operations are those that allow the creation of new blocks from which new Bitcoins are derived and which are remunerated by the system with an amount of Bitcoins. Well, the mining activity does not lead to a situation in which there is a relationship between the service provider and the recipient of the service and in which the remuneration paid to the service provider is the countervalue of the service provided in the terms provided in the case law of the Court and in particular in the Tolsma case referred to above, in such a way that in the mining activity no actual recipient or customer of the same can be identified, insofar as the new Bitcoins are automatically generated by the network.

Consequently, the lack of a direct relationship between the service provided and the consideration received in the terms indicated the mining services under consultation will not be subject to Value Added Tax".


In other words, in a simpler way, there is no VAT.


2.- Transactions with VIRTUAL CURRENCIES:.

In the judgment of the CJEU ruling of 22 October 2015, David Hedqvist, case C-264/14, in which the Court analyzes the subjection to tax of transactions involving the exchange of traditional currencies for the virtual currency "bitcoin", we will allaremos the answer.

The Court analyzes the nature and functions of bitcoin to conclude that it is a virtual currency that constitutes a means of payment in the terms indicated in letter e) of the aforementioned Article 135 of the Directive and therefore exempts transactions carried out with bitcoins under the terms provided for in that provision.

Indeed, paragraphs 44 to 53 of the judgment of 22 October 2015 state the following:

"44 As regards, second, the exemptions laid down in Article 135(1)(e) of the VAT Directive, that provision provides that the Member States are to exempt from VAT transactions relating to 'foreign currency, banknotes and coins which are lawful means of payment'."

45 In that regard, it should be recalled that the concepts used in that provision must be interpreted and applied uniformly, in the light of the versions in all the languages of the Union (see, to that effect, Velvet & Steel Immobilien, Case C-455/05, EU:C:2007:232, paragraph 16 and the case-law cited, and Commission v Spain, Case C-189/11, EU:C:2013:587, paragraph 56).

46 As the Advocate General stated in points 31 to 34 of her Opinion, the different language versions of Article 135(1)(e) of the VAT Directive do not make it possible to determine unambiguously whether that provision applies only to transactions involving traditional currencies or whether, on the other hand, it also covers transactions involving other types of currency.

47 Where there are linguistic differences, the scope of the expression concerned cannot be assessed on the basis of an exclusively literal interpretation. That expression must be interpreted in the light of the context in which it is placed and the purposes and structure of the VAT Directive (see Velvet & Steel Immobilien, C-455/05, EU:C:2007:232, paragraph 20 and the case-law cited, and Commission v Spain, C-189/11, EU:C:2013:587, paragraph 56).

48 As recalled in paragraphs 36 and 37 of this judgment, the exemptions provided for in Article 135(1)(e) of the VAT Directive are intended to alleviate the difficulties relating to the determination of the taxable amount and the amount of deductible VAT which arise when taxing financial transactions.

49 However, transactions involving non-traditional currencies, that is to say, currencies other than currencies which are legal means of payment in one or more countries, constitute financial transactions provided that those currencies have been accepted by the parties to a transaction as an alternative means of payment to the legal means of payment and have no purpose other than that of being a means of payment.

50 Moreover, as argued in essence by Mr. Hedqvist argued in essence at the hearing, in the specific case of exchange transactions, the difficulties relating to the determination of the taxable amount and the amount of deductible VAT may be the same whether the transaction involves an exchange of traditional currencies, which is in principle exempt under Article 135(1)(e) of the VAT Directive, or an exchange, in either direction, of such currencies for virtual currencies with a two-way flow which, without being legal means of payment, constitute a means of payment accepted by the parties to a transaction.

51 It thus follows from the context and purpose of Article 135(1)(e) that to interpret that provision as referring only to transactions involving traditional currencies would be tantamount to depriving it of some of its effects.

52 In the main proceedings, it is common ground that the virtual currency 'bitcoin' has no purpose other than that of being a means of payment and that certain operators accept it as such.

53 It must therefore be concluded that Article 135(1)(e) of the VAT Directive also covers supplies of services such as those at issue in the main proceedings, consisting of an exchange of traditional currencies for units of the virtual currency 'bitcoin' and vice versa, and carried out in return for payment of an amount equivalent to the margin constituted by the difference between, on the one hand, the price at which the trader concerned purchases the currencies and, on the other, the price at which he sells them to his customers."



  1. Cryptocurrency mining operations are exempt for VAT purposes.
  2. Bitcoins, cryptocurrencies and other digital currencies are currencies and therefore the financial services related to them are exempt from Value Added Tax under the terms established in Article 20.One.18 of Law 37/1992.


Josep Navarro's picture
Josep Navarro es Licenciado en Económicas por la UB, especializado en Inspecciones Tributarias, con más de 25 años de experiencia en asesoría fiscal para empresas y particulares en España.