The European Court ruled that Bitcoin transactions along with other virtual currencies on the EU territory should not be subject to value added tax, the court said in a statement.
This kind of court decision equates the virtual currency to traditional currencies in terms of taxation, says The Wall Street Journal.
In accordance with the court order, the operations of exchange of traditional currencies in bitcoins should be free from value added tax, as EU rules prohibit the imposition of such a tax on exchange operations.
This decision could have a substantial support for Bitcoin because it removes the threat that the tax imposition on transactions with this virtual currency will increase the value of its purchase and use, experts say.
The decision of the European Court also clarifies the question to what types of assets should be referred the virtual currency. Despite the fact that the UK previously recognized bitcoin currency, the tax authorities in some countries, including Sweden and Germany, stated that bitcoin should be considered as commodities transaction which should be subject to value added tax.
This ruling is "the first step towards the approval of Bitcoin as a real alternative to national currencies," notes Richard Asquith, Avalara vice president, operating in the field of monitoring compliance with fiscal discipline.
The Bitcoin, which is reated in 2008 by a programmer or team of programmers known under the name Satoshi Nakamoto, is one of the most popular alternatives to the traditional currency, and is a code that is not regulated by any country or bank supervisory authority in the world. It has not a single emission center. Its emission is limited algorithmically: in theory every owner of a powerful computer can "get" bitcoins through the use of computing power, but there is a limit of total money in circulation.