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Vladimíra Mačuhová, daňový poradca

Activities and transactions with crypto-assets can also have tax consequences in the area of value added tax (“VAT”), even though some transactions in virtual currencies are outside VAT system.

Good news for virtual currencies

The basis of VAT legislation for virtual currencies is the ruling of the European Court of Justice (“ECJ”) in case C-264/14 David Hedqvist, where Mr Hedqvist provided virtual currency exchange services (in particular Bitcoin) through an online platform for standard fiat currencies. The subject matter of the dispute was whether such supply of services can be exempt from VAT. The ECJ has ruled, that virtual currencies are comparable to fiat currencies, as both types of currency have their main function as an exchange means. The Court therefore ruled, that exchange transactions involving the exchange of fiat currencies for virtual currencies, and vice versa, are transactions exempt from VAT as financial services. According to the judgement, we can conclude, that transactions which involve the supply of goods or services in exchange for a virtual currency or the sale of a virtual currency will be treated for VAT purposes in the same way as for a fiat currency.

Move to the crypto-world

There is currently no internationally agreed standard definition of a crypto-asset, but the FATF (“Financial Action Trust Force”) defines a “virtual asset” as “a digital representation of value that can be digitally traded or transferred, and can be used for payment or investment purposes.” Crypto-asset is a general term for digital financial assets based on decentralized database technology (eg blockchain) and cryptography as part of their perceived or inherent value. At the same time, several institutions (including the International Monetary Fund) consider each asset based on this technology to be a crypto-asset. On the other hand, the European Central Bank (“ECB”) considers as crypto-assets only assets in digital form that do not represent a financial claim, financial liability or ownership right.

In general, crypto-assets are divided into 3 basic categories:

  • Payment tokens, mainly virtual currencies.
  • Financial and investment tokens that are similar to a security.
  • Utility tokens provide entitlement to a specific good or service. For example, they may act as a voucher for a particular good or service (even if the good / service itself is not yet available), including game tokens.

Do all transactions with crypto-assets have the same VAT regime?

Crypto-asset transactions can be divided into several types of transactions, that are treated differently for VAT purposes. In addition to the transactions already mentioned above in this article, it is also:

  • supplies of goods and services subject to standard VAT and paid by virtual currencies;
  • virtual currency transaction security services (digital wallets);
  • virtual currency transaction verification services (i.e., mining);
  • intermediation services provided by exchange platforms (exchanges) for consideration.

The following table shows how individual transactions are assessed from a VAT perspective according to the prevailing approach in the EU Member States. (Note: Cases with no relevant binding legislative source in Slovakia or non existant official opinion of slovak authorities are marked red.)


Activity Subject to VAT?
Using virtual currency to buy goods / services Not subject to VAT
Supplies of goods / services paid by virtual currency Considered as any other supplies subject to VAT purchased by fiat money
Virtual currency exchange services Subject to VAT, but it is an exempt financial service
Digital wallet services Not subject to VAT if it is free


Subject to VAT if the digital wallet provider charges for the service – it is then assessed whether it can be exempted as financial services

Mining Mostly not subject to VAT (different interpretations in individual EU countries)
Intermediation services provided by exchange platforms Taxable, not considered an exempt financial service
Financial and investment tokens VAT regime applied according to the assets they represent
Utility tokens May be taxed as a single-purpose or multi-purpose voucher, or subject to VAT as a supply of goods or services

If I am an individual, I have no problem with VAT. Really?

For VAT purposes, it does not matter whether a natural person – a citizen is e.g., freelancer, but it is important whether person performs an economic activity within the meaning of the definition of VAT Act. An economic activity is the independent performance of any economic activity, regardless of the purpose or results of that activity, if it generates income. I.e., activities in the area of transactions with crypto-assets may also result in the obligation to register for VAT, to pay VAT and other obligations under the law, if the activity is subject to VAT and the person exceeds certain turnover.

The information above on this website is intended to give you a basic overview of tax, accounting, and legal regulations. They do not in any way serve as a guide for their application in practice, which may differ significantly from the legislation in force at the time. The information on this website does not guarantee legal, accounting, tax or other professional advice or services. As such, information should not be taken as a substitute for professional consultations with accountants, tax, legal or other advisors. EMINEO PARTNERS shall not be liable and shall not be liable for any discrepancies, omissions or results obtained from the use of this information. All information and examples are provided without any guarantee of their applicability in practice. EMINEO PARTNERS is not obliged to reflect the applicable legislation on the information and examples provided on this website.