Here in the UK Bitcoins are treated as an electronic service. This means once you're registered for VAT (and you must past ~£70k revenue) you have to charge VAT on sales to:
- Anyone in the UK
- Individuals in the EU
And:
- Reverse charge VAT to business in the EU
Having to charge VAT on Bitcoins is a show stopper if you're intending to sell them unless you close your doors to EU customers.
Bitcoins need to be classed as VAT exempt, or small business in the UK trying to get into Bitcoin will always struggle to grow.
There is no official stance on bitcoin by the UK government, or tax authorities. VAT is not chargeable on bitcoin transactions. There was one gy who was advised by his accontants that he should be charging VAT but that was not a legal requirement, more his accoutnants taking a very risk averse position, that way if VAT was ever brought in on bitcoin he would not get an unexpected VAT bill.
There are There are also some goods and services that are 2 types of 'exemption' to VAT:
* exempt - so no VAT is charged on them
* outside the scope of the UK VAT system altogether
Bitcoin is outside the scope of VAT entirely and it would require the tax man/govt making a declaration on bitcoin as to how it is treated under VAT rules. This has not happened, therefore VAT is not applicable to bitcoin.
A HMRC technical expert sounds very vague, also they (the technical expert) do not have the authority to apply VAT to an item. VAT laws are very proscriptive that is why when they add VAT (or change the rate) to e.g. hot foods, it is done through the budget by government and not by HMRC. That is why M&S were involved in a long running battle with HMRC over VAT on teacakes (the marshmallow/chocolate kind) or why Jaffa cakes dont have VAT on them (big legal case to prove they are cakes (VAT exempt) and not chocolate biscuits (not VAT exempt).
PS. the reason a jaffa cake is vat exempt is because when it goes stale it goes hard (like a cake) whereas a biscuit goes soft.
If you are actually concerned about this ask for something in writing that specifically states they are not exempt from VAT and at which rate VAT is applied to them. I am willing to bet that they will not provide an official document that shows VAT is applicable because no offical detrmination has been made. If it had it would have been significant news in the bitcoin world especially amongst UK users.
Comments
Here in the UK Bitcoins are treated as an electronic service. This means once you're registered for VAT (and you must past ~£70k revenue) you have to charge VAT on sales to:
- Anyone in the UK
- Individuals in the EU
And:
- Reverse charge VAT to business in the EU
Having to charge VAT on Bitcoins is a show stopper if you're intending to sell them unless you close your doors to EU customers.
Bitcoins need to be classed as VAT exempt, or small business in the UK trying to get into Bitcoin will always struggle to grow.
No they are not.
There is no official stance on bitcoin by the UK government, or tax authorities. VAT is not chargeable on bitcoin transactions. There was one gy who was advised by his accontants that he should be charging VAT but that was not a legal requirement, more his accoutnants taking a very risk averse position, that way if VAT was ever brought in on bitcoin he would not get an unexpected VAT bill.
There are There are also some goods and services that are 2 types of 'exemption' to VAT:
* exempt - so no VAT is charged on them
* outside the scope of the UK VAT system altogether
Bitcoin is outside the scope of VAT entirely and it would require the tax man/govt making a declaration on bitcoin as to how it is treated under VAT rules. This has not happened, therefore VAT is not applicable to bitcoin.
[deleted]
A HMRC technical expert sounds very vague, also they (the technical expert) do not have the authority to apply VAT to an item. VAT laws are very proscriptive that is why when they add VAT (or change the rate) to e.g. hot foods, it is done through the budget by government and not by HMRC. That is why M&S were involved in a long running battle with HMRC over VAT on teacakes (the marshmallow/chocolate kind) or why Jaffa cakes dont have VAT on them (big legal case to prove they are cakes (VAT exempt) and not chocolate biscuits (not VAT exempt).
PS. the reason a jaffa cake is vat exempt is because when it goes stale it goes hard (like a cake) whereas a biscuit goes soft.
If you are actually concerned about this ask for something in writing that specifically states they are not exempt from VAT and at which rate VAT is applied to them. I am willing to bet that they will not provide an official document that shows VAT is applicable because no offical detrmination has been made. If it had it would have been significant news in the bitcoin world especially amongst UK users.
I see you deleted your reply, I hope that does not prevent you from seeign that i did reply to it.