In more detail
In the judgement, the Dutch Court states that there is no doubt that the transaction fees can be seen as the consideration for the claimant's activities for validating the transaction. The fact that claimant does not always receive a transaction fee is irrelevant. The Court compares this to an individual reaching out to several realtors when buying a new home, and then choosing only one of them wherein only this realtor receives a commission. According to the Court, one must still hold that all of the realtors carry out economic activities despite only one being remunerated.
Furthermore, the Dutch Court concludes that the validation of transactions stands in such a relation to creating blocks on the blockchain, that one doesn’t go without the other. Both of the activities focus on receiving the reward, as a validated transaction can only be verified when it is created on the blockchain.
Therefore, the validation, verification and mining of coins are inseparably intertwined. They are all mining activities that are to be seen as a preparatory 'economic activity' indispensable to trade in bitcoin.
As the mining activities qualify as economic activity, they are exempt from VAT under article 135 under 1, d of the VAT Directive. This can be an interesting precedent for the mining of other cryptocurrencies, but perhaps also be relevant for the VAT treatment of staking of cryptocurrencies.
In dispute as well was, whether the claimant, based on statistical data indicating that 98% of the bitcoin trades involved fiat currencies other than the currencies of EU Member States, did prove that her customers are located outside of the community, which entitles to VAT deductions based on article 169 under c of the VAT Directive.
The Court rules that the claimant is free to choose its own line of evidence, however the Judge is free in the assessment of the evidence chosen. In the case at hand, the Court adopts the position that the currency in which bitcoins trades take place is not enough to conclude that the customers are established outside the community, since customers established within the community may carry out transactions in a third-country currencies. Nonetheless, the Court does conclude that, based on the statistical data, part of the customers (set out as 75%) is established outside the community.
Baker & McKenzie Amsterdam's Indirect Tax Team is available to answer any questions you might have on the judgment.
