RULING NUMBER: V1029-15
ISSUING BODY: Subdirectorate-General for Consumption Taxes
DATE: 03/30/2015
REGULATIONS: Law 37/1992 art. 20-One-18 h) and l
FACTS: The applicant is dedicated to the purchase and sale of electronic currency Bitcoin
ISSUE RAISED: Whether this activity is subject to VAT
FULL RESPONSE
1.- In accordance with section one of article 4 of Law 37/1992, of December 28, on the Value Added Tax (BOE of December 29), “The supplies of goods and services made in the spatial scope of the Tax by taxable persons for consideration, on a regular or occasional basis, in the development of their business or professional activity, will be subject to the Tax, even if they are made in favor of the partners, associates, members or participants themselves. of the entities that carry them out.”
In accordance with the provisions of section three of said provision, subjection to the Tax occurs regardless of the purposes or results pursued in the business or professional activity or in each particular operation.
Article 5.One of the same Law establishes, regarding the concept of taxable person, that for the purposes of the provisions of said Law, the following shall be considered taxable persons:
“a) The people or entities that carry out the business or professional activities defined in the following section of this article.
However, those who exclusively supply goods or provide services free of charge will not be considered taxable persons, without prejudice to the provisions of the following letter.
b) Commercial companies, unless proven otherwise.
(…)
Two. Business or professional activities are those that involve the self-management of material and human production factors or one of them, with the purpose of intervening in the production or distribution of goods or services.
In particular, extractive, manufacturing, commerce and service provision activities have this consideration, including crafts, agriculture, forestry, livestock, fishing, construction, mining and the exercise of liberal and artistic professions.
(…)».
These precepts are of general application and, therefore, also to the applicant who, consequently, will have the status of a taxable person for the purposes of the Value Added Tax when they organise human and material resources, independently and under his responsibility, to develop a business or professional activity, be it manufacturing, commerce, provision of services, etc., through the continuous delivery of goods or provision of services, assuming the risks and rewards that may occur in the development of the activity.
According to the description made in his consultation document, the applicant seems to be considered a taxable person with respect to the described activity, since he proceeds to organize on his own account material and human production factors or one of them, with the purpose of intervening in the production or distribution of goods or services. Specifically, it is dedicated to the purchase and sale of virtual currency through its own internet portal in exchange for a commission, which seems to corroborate the business nature of the activity.
2.- Article 135.1.d) of Council Directive 2006/112/EC of November 28, 2006 on the common system of value added tax establishes the exemption of the following operations:
“Art. 135.1 Member States will exempt the following operations:
d) operations, including negotiation, related to deposits of funds, current accounts, payments, money orders, debts, cheques and other negotiable instruments, with the exception of debt collection;”
Said article has been transposed by article 20.Uno.18º letters h) and i) of Law 37/1992, which provide the following exemption:
“h) Operations related to transfers, money orders, checks, drafts, promissory notes, bills of exchange, payment or credit cards and other payment orders.
(…)
i) The transmission of the negotiable instruments and payment orders referred to in the previous letter, including the transmission of discounted instruments.
(…).”
Neither the Directive nor the Value Added Tax Law define the concept of «other negotiable instruments» or «other payment orders».
The Advocate General in case C-461/12, Granton Advertising, considered that the expression «other negotiable instruments» can only include those rights that, without being a credit or a check, confer a right to a certain amount of money. To conclude that such a «point of view is also in line with the purpose that I attribute to the exemption of operations related to negotiable instruments. In my opinion, the aim is to treat, for the purposes of VAT, those rights that in commerce are regarded as similar to money, such as the delivery of money itself.»
The Court of Justice in its judgment in that case considered that the exemption provided for in article 13, part B, letter d), number 3, of the Sixth Directive (current article 135.1.d) of Directive 2006/112/EC) refers to means of payment such as checks and that due to its very operation it must involve a transfer of money.
In short, if the deliveries of money as consideration are not taxed by the Tax, the objective of this provision is the exemption of all those operations that involve the movement or transfer of money, either directly through transfers or through various instruments such as checks, promissory notes or others that involve a payment order.
Therefore, from the Granton Advertising ruling it can be concluded that the concept of «other negotiable instruments» in article 135.1.d) of Directive 2006/112/EC is closely linked to payment instruments that allow the transfer of money and that, as such, financial operations must be exempt from the Tax.
Bitcoin virtual currencies act as a means of payment and due to their own characteristics they must be understood to be included within the concept of «other negotiable instruments» so their transmission falls within the scope of VAT but is exempt.
3.- This response is communicated with binding effect, in accordance with the provisions of section 1 of article 89 of Law 58/2003, of December 17, the General Tax Law.