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Bitcoin just scored a major win

October 22, 2015, 4:12 PM UTC
Photograph by Getty Images

The highest court in Europe ruled on Thursday that Bitcoin and other virtual currencies can be exchanged without taxes—just like regular cash, Bloomberg reports.

The decision resolves a June quarrel between Sweden’s tax authority and Daniel Hedqvist, operator of a Swedish Bitcoin forum and exchange. Though the virtual currency is a tripartite product—a currency, commodity, and technology—the Court of Justice of the European Union ruled that charging value-added tax, a consumption tax common in the EU, on it would be inappropriate.

“Transactions to exchange traditional currencies for units of the bitcoin virtual currency (and vice versa) constitute the supply of services since they consist of the exchange of different means of payment,” the judges said.

Since traditional exchanges are granted exemptions from such taxes, not granting the same privileges to Bitcoin exchanges “would deprive [the cryptocurrency] of part of its effects,” they said. The point of the exemptions are, they added, to ease the flow of financial transactions. In other words, to counteract “the difficulties connected with determining the taxable amount and the amount of VAT deductible.”

The court ultimately followed the guidance of Juliane Kokott, its advocate general, in siding with Hedqvist. Kokott had urged the court to grant Bitcoin value-added tax exemptions in July, Coindesk reports.

The order is an unabashed triumph for Bitcoin advocates. Now citizens of the EU will not have to pay taxes on the Bitcoin they buy.

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For more on the ascendancy of Bitcoin exchanges, watch this video.