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Bitcoin e valute virtuali. Alcune riflessioni alla luce della decisione della corte di giustizia UE sul regime IVA applicabile ai bitcoin

Cristina Trenta

L'articolo commenta la sentenza Skatteverket v. David Hedqvist che affronta il trattamento IVA di transazioni bitcoin. L’indagine consente di concludere che, sebbene condivisibile nella sua conclusione finale, la decisione della Corte di Giustizia Europea non considera la giurisprudenza e la dottrina correnti, risultando carente stricti juris di motivazione nei suoi punti essenziali e problematica nel suo ridurre la quaestio in discussione ad un puro problema linguistico.

PAROLE CHIAVE: direttiva iva - esenzioni - bitcoin - valute virtuali - economia digitale

Bitcoin and virtual currencies. Reflections in the wake of the cjeu's bitcoin vat judgement

This paper discusses the CJEU’s case in Skatteverket v. David Hedqvist, dealing with the VAT treatment of bitcoin transactions. The research reaches the conclusion that, although the CJEU’s final decision is sound, it does not consider the current case law and literature on this point, resulting stricti jurislacking of a legal reasoning in its essential parts and also quite problematic, since it reduces the discussion to a mere linguistic issue.

Keywords: VAT Directive, exemptions, bitcoin, virtual currencies, digital economy

1. Introduction

Digital payments, electronic payments, and mobile payments are becoming an important part of our lives. Bitcoin is an alternative virtual currency released as open-source software in 2009 by Satoshi Nakamoto which has recently gained a rather central position in the market of digital payments. Bit­coin is an altogether different breed of currency: it is not emitted by a reco­gnized government and it does not rely on trust but rather on the inherent ro­bustness and resilience to tampering of a decentralized peer-to-peer network [1]. As it uses cryptography to secure transactions and to control that creation of additional units is legitimate, Bitcoin is also the first decentralized cryptocur­rency [2].

In 2012, the European Commission assessed the landscape for new types of payments in their green paper «Towards an integrated European market for card, Internet and mobile payments», recognizing how payments through the Internet are growing, identifying opportunities and obstacles, and introducing a vision of a fully integrated payments market [3], following in the tracks of the Commission’s own support of the Digital Single Market as one of the seven pillars of their Digital Agenda for Europe, with a stated goal of moving 50% of European customers to online transactions by 2015 [4].

This is no surprise, as payments have been identified as one of the main obstacles to e-commerce, given the diversity of payment methods within individual EU Member states, as well as the lack of a coherent and comprehensive regulatory framework [5]. The document also stresses how innovation and differentiation are key [6].

In 2013 the European Commission proposed a new Directive on payment services in the internal market [7], again maintaining that digital or electronic payments are a way to foster innovation that aligns with the Europe 2020 initiative and the Digital Agenda [8], and that could potentially lower costs by le­veraging the Internet [9].

A discussion of Bitcoin neatly falls within this framing based on digital innovation, facilitation of cross-border payments through the Internet, and the consolidation of a European space for e-services: as a matter of fact, the VAT Committee itself suggested in February 2015 [10] that Bitcoin could be classified as an e-service [11]. Nevertheless, the EU legislator has remained until now largely silent in respect to alternative payment systems and because of this actual regulation of Bitcoin rests in a legal vacuum.

It is in this context that the ECJ C-264/14 Skatteverket v. David Hedqvist Case [12] has to be situated, with the final judgement clearly documenting the perplexities and the disorientation surrounding not only the VAT profile of Bitcoin, but its very nature from a legal perspective. It is in this case that the ECJ first attempts to define Bitcoin as a virtual currency and consequently discusses the VAT treatment it (and any other virtual currency [13]) should be subject to [14].

2. Bitcoin

Bitcoin is a peer-to-peer cryptocurrency. It was originally described in a 2008 paper by Satoshi Nakamoto and then released as open-source software in 2009. Bitcoin does not rely on a trust system or on any central authority [15]: its legitimacy does not come from being backed up by the legal and economic system of a national state, but by a constantly changing mesh of computers running the Bitcoin software.

People who want to use Bitcoin can download Bitcoin software and create an account from which transactions can be carried out. Many different end-user applications exist on both mobile and desktop platforms that use the Bit­coin protocol. Furthermore, a number of other virtual currencies have been created that rely on modifications of it, such as Ripple, Litecoin, Peercoin, or Dogecoin [16].

Because of the way it has been conceptualized, Bitcoin works more like cash than traditional electronic means of payment such as credit cards, and besides the problems connected to its overall legal framing, its increasing adoption in the business-to-consumer space is introducing a number of tax-related issues [17].

3. The ECJ Bitcoin VAT Case

With Case C-264/14 the ECJ solved an interpretative issue between the Swedish Tax authority and David Hedqvist, a Swedish citizen. The Skatterätt­snämnd (Swedish Revenue Law Commission) [18] was requested to provide an opinion in respect to an economic activity Hedqvist wanted to start and consisting in the exchange of Bitcoin against Swedish crowns, and specifically to clarify which VAT treatment should be applied to such transactions.

A preliminary decision was issued stating that these operation identified first of all a supply of services for consideration, but one that nevertheless was exempt from VAT because Bitcoin is a means of payment. The Swedish Tax administration appealed against this preliminary decision [19] to the Supreme Administrative Court, which in turn referred the issue to the ECJ for a preli­minary ruling under art. 267 TFEU [20].

The ECJ ruling is now the authentic interpretation of the VAT treatment of Bitcoin under the EU VAT Directive [21] and, by virtue of the TFEU, it is directly applicable and binding in all Member states and in the EU as a whole [22]. This resulting harmonization of the interpretation of the VAT Directive should not be underestimated [23]: as of September 2016, the Italian Tax Agency has made the ruling of the ECJ on Bitcoin [24] part of its praxis.

The ECJ was asked to answer two questions. First, whether the exchange against payment of traditional currency against virtual Bitcoin currency and vi­ceversa was a VAT service [25]. The ECJ gave a positive answer and clearly considered Bitcoin transactions as a service [26] carried out against consideration, falling within the scope of VAT, and excluded that Bitcoin could be characteri­zed as tangible property according to the VAT Directive [27], since Bitcoin is a virtual currency and a virtual currency has no other purpose than to be a means of payment [28].

It is worth to remember that art. 14 (1) of the VAT Directive maintains that «(s)upply of goods shall mean the transfer of the right to dispose of tangi­ble property as owner», while art. 24 (1) says that «(s)upply of services shall mean any transaction which does not constitute a supply of goods» [29]. The de­finition of supply of services is residual [30] and mirroring the one contained wi­thin art. 57 of the TFEU, where a service is defined as «(p)rovided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons». Consequently, services are simply residual constructs and more precisely those not protected by the dispositions relating to a freedom of movement for goods, capital and persons [31].

This point of the ruling is certainly one where agreement can be had: Bit­coin lack the very essence of tangible goods, as defined in VAT [32], or of a valuable commodity [33], since they are deprived of any physical representation [34]. This is the line of reasoning the ECJ usually applies to traditional currencies, as clarified in the First National Bank of Chicago Case [35].

The ECJ also concluded that such operations are not only against consi­deration, but consideration is directly linked to said supplies [36]. Again, this is sensible, as extensive literature in the field supports the point [37].

Second, they were asked whether art. 135(1) of the VAT Directive regula­ting the exemption regime for certain transactions allows the application of the exemption even if the transactions are represented in Bitcoin [38]. The ECJ answered this second question positively as well, considering virtual currencies to be means of payment and therefore comparable to foreign currency, even in the absence of any legal tender [39].

The line of reasoning here is that while VAT exemptions must be interpre­ted narrowly since they are an exemption to the general rule [40], transactions involving Bitcoin can be classified exempt following financial transactions [41], as these not necessarily need to be carried out by banks or financial institutions [42]. Bitcoin is a contractual tool enabling payment: it cannot be strictly classified as a current or deposit account, a payment, or a transfer. As opposed to negotiable instruments as listed by art. 135(1)(d) of the VAT Directive, Bitcoin is a means of payment between operators that accept it [43].

The ECJ moves then to examining the exemptions listed in art. 135(1)(e) [44], notes they include currency, banknotes, and coins used as legal tender [45], maintains these terms and the wording used in letter (e) should to be interpreted and applied uniformly across the different languages used throughout the European Union [46], quoting in support the Advocate General’s opinion that the language-specific versions of art. 135(1)(e) of the VAT Directive do not per­mit to assess without any ambiguity

«whether that provision applies only to transactions involving traditional curren­cies or whether, on the contrary, it is also intended to cover transactions involv­ing another currency [47]».

By means of this argumentation, the ECJ classifies Bitcoin transactions as non-traditional currency: they are different from legal tender but, since they are accepted by the parties to a transaction as an alternative to legal tender, they are a means of payment and therefore they are financial transactions [48]. Consequently, they may enjoy the exemption, as any different conclusion would deprive the disposition of part of its effect [49].

«It must be held that Article 135(1)(e) of the VAT Directive also covers the supply of services such as those at issue in the main proceedings, which consist of the exchange of traditional currencies for units of the ‘bitcoin’ virtual currency and viceversa, performed in return for payment of a sum equal to the difference bet­ween, on the one hand, the price paid by the operator to purchase the currency and, on the other hand, the price at which he sells that currency to his clients [50]».

Thus, the ECJ established that Bitcoin is virtual currency, falling within the scope of art. 135(1)(e) of the VAT Directive. Interpretative work was necessary since the Directive does not carry a specific provision regulating Bitcoin and an additional layer of ambiguity is introduced by the various national translations of the text itself.

4. Bitcoin as currency in European frameworks

The judicial interpretation of the Court is consistent with the European VAT system as a whole, since payments in currency do not have VAT relevance.

VAT is a general tax on final consumption [51], levying tax on private expenditures. While currency certainly enables one to carry out a payment and is there­fore an accessory to consumption, it cannot be consumed [52] in itself and should not be taxed, since «there is no sale on which VAT must be charged» [53].

This is the ratio behind the exemption for transactions concerning currency, banknotes, coins, payments, and the reason they carry no VAT liability. This also applies when day-to-day currency is exchanged against other types of cur­rency [54], as clarified in the First National Bank of Chicago Case [55]. Bitcoin is currency, a means of payment albeit a non-traditional one, should be classified as a financial transaction and carry no VAT attachments [56].

It must be noted that while doctrine tells us that the legal description of exempt financial services is extraordinarily lengthy and complex [57], it is preci­sely this complexity that supports the ECJ’s broad interpretation of financial transactions and their inclusion of Bitcoin among these, along the lines of the opinion of the Advocate General recalled earlier. The ECJ ruling is also consistent with a 2012 opinion of the European Central Bank (ECB), stating that

«it is possible to provide the following definition of virtual currency: “a virtual currency is a type of unregulated, digital money, which is issued and usually con­trolled by its developers, and used and accepted among the members of a specific virtual community” [58]».

This notwithstanding, perplexities may still arise stricti iuris in relation to the existing EU and international legal frameworks regulating currency, as the way the ECJ worded the ruling to support their conclusions may prove to be a challenge to the existing, and tested, definitions of currency provided in the standing international and European legal frameworks. It should be noted as well that in a letter written in October 2015, ECB president Mario Draghi now posits that virtual currencies are different from traditional currency:

«(they) are not scriptural, electronic, digital or virtual forms of a particular cur­rency. They are something else, different from known currencies [59]».

Draghi restates an opinion initially expressed in a February 2015 ECB report, in which all arguments in support of any similarities between Bitcoin and traditional currencies from a strict legal perspective are dismissed:

«even if the terms “virtual currency” and “virtual currency schemes” are used in this report, Eurosystem central banks do not recognise that these concepts would belong to the world of money or currency as used in economic literature, nor is virtual currency money, currency or a currency from a legal perspective (…). From a legal perspective, money is anything that is used widely to exchange value in transactions. The term currency is used for “minted” forms of money; nowa­days usually taking the form of coins and banknotes. In a more conceptual sense, a (particular) currency refers to the specific form of money that is in general use within a country. Given that VCS [60] are not used widely to exchange value, they are not legally money, and – in the absence of minted versions – they are not cur­rency either, and no virtual currency is a currency (…). VCS, such as Bitcoin, use their own denomination (e.g. Bitcoin). VCS are not scriptural, electronic, digital or virtual forms of a particular currency. They are something else, different from known currencies. No virtual currency has so far been declared the official cur­rency of a state, nor do any physical formats, backed by law, have a legal tender capacity. Therefore, no creditor is obliged to accept payment with it to discharge a debtor of its debt. This means that virtual currencies can be used only as con­tractual money, when there is an agreement between buyer and seller in order to accept a given virtual currency as a means of payment. In the EU, virtual currency is not currently regulated and cannot be regarded as being subject to the (cur­rent) PSD [61] or the EMD [62]. (…) As a result, analysis from the economic and legal perspectives leads to the conclusion that virtual currencies should not be bundled into the generic words of money or currency, even though their technical appea­rance takes a form which has some similarities to scriptural money and/or electro­nic money [63]. For the purpose of this report, and based on the characteristics cur­rently observed, virtual currency can therefore be defined as a digital representa­tion of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money [64]».

Although this ECB report does not possess the level of formality required by Council Decision 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions [65], it is anyway an authoritative opinion that the ECJ should have taken into consideration, if only to provide reasoned evidence of why the ECB arguments bore no relevance in the specific VAT case being assessed. This is for example what the VAT Committee, in its Working Paper on VAT, No. 854 of April 2015 [66], did. The circumstance is even more unfortunate considering that the 2012 ECB report was instead factually referenced [67] by the Court.

The conclusions of the ECJ find further obstacle in the International Convention for the Suppression of Counterfeiting Currency [68]. Currency is here defined in art. 2 and

«understood to mean paper money (including banknotes) and metallic money, the circulation of which is legally authorised».

This definition has also been adopted by the Council Framework Decision on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the Euro [69]. Art. 1 therein states that

«“currency” means paper money (including banknotes) and metallic money, the circulation of which is legally authorised including euro banknotes and euro coins, the circulation of which is legally authorised pursuant to Regulation (EC) 974/98».

The same definition of currency is recalled in the Council Decision of 2001 [70] supplementing the previous Council Framework Decision. Art. 1(a) of the Decision states that

«“counterfeit notes” and “counterfeit coins” mean notes and coins defined as such by Article 2 of Regulation (EC) No 1338/2001».

Regulation 549/2013 on the European system of national and regional accounts in the European Union defines what currency is in its section F, and the idea of authorization is again central [71]:

«Currency and deposits (F.2) 5.74 Definition: currency and deposits are cur­rency in circulation and deposits, both in national currency and in foreign curren­cies (…). 5.76 Definition: currency is notes and coins that are issued or authorised by monetary authorities».

After affirming within its 7th Recital that, in the field of currency, EU law supplements the International Convention for the Suppression of Counterfeiting Currency (Geneva Convention), the Directive on the protection of the Euro and other currencies [72]also follows this approach, stating in its art. 2(a) that legal authorization is necessary for circulation as well:

«“currency” means notes and coins, the circulation of which is legally authorised, including euro notes and coins, the circulation of which is legally authorised pursuant to Regulation (EC) No 974/98».

In all evidence, this relying on mechanisms of “legal authorization” that extends all the way to circulation, whether by “monetary authorities” or other national entities, directly collides with the programmatically decentralized, self-managed, peer-to-peer approach of Bitcoin.

Additionally, another front relates to the digital-only nature of Bitcoin. The Council Framework Decision on combating fraud and counterfeiting of non-cash means of payment, art. 1, maintains that a “payment instrument”, a means of payment, necessitates materiality [73]:

«“Payment instrument” shall mean a corporeal instrument, other than legal tender (bank notes and coins), enabling, by its specific nature, alone or in con­junction with another (payment) instrument, the holder or user to transfer mo­ney or monetary value, as for example credit cards, eurocheque cards, other cards issued by financial institutions, travellers’cheques, eurocheques, other cheques and bills of exchange, which is protected against imitation or fraudulent use, for example through design, coding or signature».

In Directive 2009/110/EC [74], electronic money is defined in art. 2. It is issued on receipt of funds for the purpose of making payment transactions:

«“electronic money” means electronically, including magnetically, stored mone­tary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Article 4 of Directive 2007/64/EC, and which is accepted by a natural or legal person other than the electronic money issuer».

Again, this condition excludes the applicability of this legal instrument to Bitcoin, since Bitcoins are not issued on receipt of funds.

If we extend our inquiry to the recent Directive 2015/2366 on payment services in the internal market [75], whose primary goal is to support the deve­lopment of electronic payments in a technologically neutral manner within the EU market [76] and which recognizes the role of innovative payment services [77], we are presented with obstacles that prevent the inclusion of Bitcoin.

The Annex of the Payment Services Directive lists a series of different forms of payment but its formulation, built around and for traditional payment services, does not leave room for payments via Bitcoin [78].

Even though there are improvements, for instance in terms of the legal pro­tection afforded to users of payment services, the wording of the text offers no space for the eventual regulation of virtual currencies under the Directive and substantially leaves things as they are, in a state of legal uncertainty [79].

In 2014, the possibility to regulate Bitcoin and other cryptocurrencies with the next revision of the Money Laundry Directive was being discussed at the Expert Group on Payment Systems Market [80], but the 2015 version of the Mo­ney Laundry Directive 2015/849, replacing the Money Laundry Directive 2005/60/EC [81], contains no mention of cryptocurrencies [82]. This was follo­wed in April 2016 by a proposal by the EU Commission to add regulations for virtual currencies within the text of the Directive [83]. The Ecofin Council urged these changes to be submitted «as soon as possible and no later than the second quarter of 2016» [84]: as of June 2016, this is still to come.

Table 1. – Synthetic recap of the various definition of payment, currency and virtual currency discussed above

International Convention for the suppression of counterfeit­ing currency, 1929

In the present Convention, the word “currency” is understood to mean paper money (including banknotes) and metallic money, the circulation of which is legally authorised.

Council framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions aga­inst counterfeiting in connection with the introduction of the Euro

Continued

“Currency” means paper money (including banknotes) and metallic money, the circulation of which is legally authorised including euro banknotes and euro coins, the circulation of which is legally authorised pursuant to Regulation (EC) 974/98.

2001/413/JHA: Council Fra­mework Decision of 28 May 2001 combating fraud and co­unterfeiting of non-cash meansof payment. OJ L 149, 2 June 2001

“Payment instrument” shall mean a corporeal instrument, other than legal tender (bank notes and coins), enabling, by its specific nature, alone or in conjunction with another (payment) instrument, the holder or user to transfer money or monetary value, as for example credit cards, eurocheque cards, other cards issued by financial institutions, travellers’cheques, eurocheques, other cheques and bills of exchange, which is protected against imitation or fraudulent use, for example through design, coding or signature.

Directive 2009/110/EC

“Electronic money” means electronically, including mag­netically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Article 4 of Directive 2007/64/ EC, and which is accepted by a natural or legal person other than the electronic money issuer.

European Central Bank 2012

Virtual currency: a virtual currency is a type of unregulated, digital money.

Regulation n. 549/2013

Currency and deposits (F.2) 5.74 Definition: currency and deposits are currency in circulation and depo­sits, both in national currency and in foreign currencies. 5.76 Definition: currency is notes and coins that are issued or authorised by monetary authorities.

Directive 2014/62/EU

“Currency” means notes and coins, the circulation of which is legally authorised, including euro notes and coins, the circulation of which is legally authorised pursuant to Reg. (EC) n. 974/1998.

European Court of Justice 2015

Par. 49 – Transactions involving non-traditional currencies, that is to say, currencies other than those that are legal tender in one or more countries, in so far as those currencies have been accepted by the parties to a transaction as an alternative to legal tender and have no purpose other than to be a means of payment;

Continued

Par. 52 – The ‘bitcoin’ virtual currency has no other purpose than to be a means of payment.

European Central Bank 2015

As a result, analysis from the economic and legal perspectives leads to the conclusion that virtual currencies should not be bundled into the generic words of money or currency, even though their technical appearance takes a form which has some similarities to scriptural money and/or electronic money.

For the purpose of this report, and based on the characteristics currently observed, virtual currency can therefore be defined as a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money.

President of the ECB 2015

Virtual currency are not scriptural, electronic, digital or virtual forms of a particular currency. They are something else, different from known currencies.

Directive 2015/849/EU

“Electronic money” means electronic money as defined in point (2) of Article 2 of Directive 2009/110/EC.

 

 

5. Analysis of the ruling

On one hand, the conclusions the ECJ draws in the case are sound. On the other hand though, they might be conflicting with the legal frameworks described so far, and with the more recent 2015 Report of the ECB.

Bitcoin does not rely on nor requires any legal authorization, not even for circulation, and its classification as “currency” might prove to be an impossible task if we proceed according to the aforementioned EU legal frameworks. What the different national translations of the VAT Directive say a currency is are at best a secondary problem and at worst an unnecessary distraction diverting attention from the actual issues.

Terms such as “currency”, “money”, “payment”, have clear and unequivocal definitions in both EU and international law: if we classify according to such definitions, Bitcoin lacks the essential characteristics to be a currency. This is why the 2015 Report of the ECB maintains that Bitcoin is a

«digital representation of value, that only in some circumstances can be used as an alternative to money»,

a definition also adopted by the International Monetary Fund [85] in 2016. Let us examine the approach followed by the ECJ and the problems it creates in detail.

5.1. Existing legal frameworks on currency

The ruling altogether dismisses existing legal definitions of currency as enshrined in the standing European and international frameworks, and because of this ends up contributing to creating even more uncertainty in an already confusing legal space. Such an approach is difficult to explain considering how these could have provided a solid reference point to the final decision regardless of its leaning, even more so when one considers how the ECJ already resorted to the 1929 International Convention for the suppression of counterfeiting currency in the Max Witzemann v. Hauptzollamt München-Mitte Case [86], another VAT case.

Having used it before, it can be assumed that the ECJ recognizes the legal validity of the Convention in the field of VAT. The Court’s decision to ignore it when dealing with a case involving VAT and currencies remains obscure, unless one posits that the way the Convention, a 1929 document, clearly defines currency in a manner that excludes our current understanding of virtual currencies is the reason to. Still, even if this was the case, it would have been better to argue for a different interpretation and an update of older definitions rather than simply elude the issue.

This is especially true if we consider that Council Framework Decision [87] art. 2, “Relation to the Convention”, affirms in its first paragraph that

«the purpose of this framework Decision is to supplement the provisions and to facilitate the application of the Convention by the Member States in accordance with the following provisions»,

meaning that not only the Decision states expressis verbis the validity of the International Convention for the suppression of counterfeiting currency in EU law, but also highlights a European will to facilitate the application of the Convention itself in the legislation of Member states [88]. This is of course what the ECJ has been doing in a number of cases: the Dimensione Direct Sales Case [89] explicitly states that EU law must be interpreted consistently with internatio­nal law, especially where a connection exists between the two.

«According to settled case-law, EU legislation must, so far as possible, be in­terpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the European Union».

Said doctrine of consistent or uniform interpretation [90] is also in line with the TEU, whose art. 3(5) states that the EU promotes the strict observance of international law.

It is then plain to see how not only the wording used by the ECJ in the Bit­coin case is at odds with the doctrine of consistent interpretation of EU law with international law, but it also falls out of line with the doctrine of uniform interpretation of EU law and is inconsistent with the Court’s usual approach.

Again: in the CILFIT Case, the ECJ ruled that EU law has to be interpreted in the light of EU law as a whole:

«Every provision of community law must be placed in its context and inter­preted in the light of the provisions of community law as a whole [91]».

In the Hagen Case [92], the Court states that it is necessary to guarantee uniformity to EU law and use the very same terms used in community law whenever possible:

«terms used in community law must be uniformly interpreted and implemented throughout the community, except when an express or implied reference is made to national law».

Furthermore, this specific line of reasoning and interpreting has been used by the ECJ particularly in the area of EU VAT. In the Coöperatieve Aardappelenbewaarplaats Case [93], it is maintained that EU VAT should be interpre­ted considering whether a certain expression is already part of a provision in community law:

«It should be noted in the first place that the expression in issue is part of a provision of community law which does not refer to the law of the member states for the determining of its meaning and its scope; it follows that the interpreta­tion, in general terms, of the expression may not be left to the discretion of each member state».

Existing international and European legal frameworks provide a very clear definition of currency, money, and payment instrument that are already una­nimously used. It is then certainly surprising to see how in the Bitcoin Case the Court bundles together legal and non-legal tender in their own VAT definition of currency. In the light of what exposed so far, the whole argumentation concerning how national official translations of currency, or money, coin, and so on are not unequivocal would seem to suggest a much more useful and thorough approach: first, investigate whether an European, community, or international definition exists that can be followed; second, explain why any such definition is either useful and usable, or it is not. Unfortunately, this is not what the ECJ did.

Classifying Bitcoin and virtual currencies is really a matter of whether they should be considered to fall inside or outside of the monetary system, rather than a linguistic problem related to definitions. In this respect, it is worth noting that the EU Commission categorically excluded private money from the current definition of currency:

«What characterizes official currencies including the euro is that they consist in a monetary system designed and controlled by a state (…), and conversely pri­vately issued money like virtual currency schemes (e.g. Bitcoin) these are not of­ficial currencies and have no legal tender status (...) they are not official curren­cies, and private money transactions are not official currencies and they are not governed by monetary law [94]».

This was also the opinion of the ECB in 2015. In their document on virtual currencies, they warned against the adoption of improper terminology:

«virtual currencies should not be bundled into the generic words of money or currency, even though their technical appearance takes a form which has some similarities to scriptural money and/or electronic money [95]».

The European Banking Authority (EBA) also issued a report titled “Warning to Consumers on Virtual Currencies”. The report argued that customers could be confused by the expression “virtual currency” and fail to understand or underestimate risks and opportunities. The EBA also maintained that virtual currency falls outside of EU law in respect to refund rights and consumer protection.

«Exchange platforms are not banks that hold their virtual currencies as a de­posit. If an exchange platform loses any money or fails, there is no specific legal protection (...) using virtual currencies as a means to pay for goods and services you are not protected by any refund rights under EU law [96]».

Adopting and reviewing the existing European and international law nomenclature in the field would have allowed the ECJ to clarify the meaning of “currency” in the context of the VAT Directive: in the absence of any such process, the ruling cannot but be lacking when it comes to framing the phenomenon, to understanding its implications, and to furthering the already ongoing legal conversations on cryptocurrencies.

5.2. Alternativity and competition

In his Opinion concerning the case, the AG argued that art. 135(1)(e) of the VAT Directive requires to be interpreted in the light of the principle of neutrality [97], neutrality that in EU VAT requires in turn a consistent recourse to the principle of competition between transactions. EU competition laws sub­mit that similar transactions have to be taxed similarly [98]. While on one hand the ECJ discuss in the ruling how Bitcoin and traditional currencies can be presented as alternatives, since Bitcoin can be used as an alternative to legal tender and it is a means of payment [99], on the other hand the Court does not consider competition between the two.

Is Bitcoin really like currency then? And if it can really be used as alternative to legal tender, is it then eligible for the application of the same VAT regime and consequent exemption?

The concepts of similarity and interchangeability between different pro­ducts and services are nothing new in EU law. In its 2012 Roundtable on Mar­ket Definition, the OECD, reporting the opinion of the EU, states that

«The goal of the assessment of demand side substitutability is to identify the group of products or services that are alternatives in satisfying the needs normally served by the product in question in the eye of the relevant customers [100]».

The EU Commission itself provides the following definition of interchan­geable or substitutable product or service [101]:

«A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’characteristics, their prices and their intended use».

For the ECJ, substitutability is whether products or services are in fact a possible alternative choice for consumers [102]: in the Chiquita Bananas Case, it is stated that

«interchangeability is a relevant indicator for assessing whether one product is “exposed to competition from others” [103]».

Interestingly, in the JP Morgan Fleming Claverhouse Case, the ECJ also ruled that similarity in transactions is an element placing operations in competition with one another [104]. Similarity, not identity, precludes the application of a different VAT treatment. This approach was reinforced in Commission v. Germany [105], adding weight to the idea that competition plays indeed a role here, since competition requires to consider not only the present state of the market but also the possibilities for development within the context of the free movement of goods and services at the community level [106].

Substitutability, a product being alternative to another, and in this case the possibility to use Bitcoin in place of legal tender as argued by the ECJ, would suggest a complementary recourse to the concept of competition in EU law and in EU VAT law, which is unfortunately missing from the discourse carried on by the ruling.

5.3. Further comments on competition

If substitutability and competition go hand in hand, do traditional currency and virtual currency or cryptocurrency really compete up to the point they have to be treated equally from a VAT perspective? Again, the ECJ does not say.

Doctrine is split on whether there exist competitive effects. A number of authors maintain that Bitcoin will not directly compete with traditional currency, while other authors argue that cryptocurrencies are already now a com­petitor, simply because they exist. Nevertheless, there seems to be a general agreement that a full scale “replacement” of traditional currency in its entirety with cryptocurrency is unlikely [107].

It has also been suggested that a competitive effect is more likely to manifest at the organizational and business level, with private producers of currency such as Bitcoin competing against financial institutions, rather than at the currency level [108], or that the two markets coexist and that the dividing line between them is difficult to draw in abstract [109].

Furthermore, an additional issue not mentioned by the ECJ in respect to competition can be surmised in a possible deflationary effect of Bitcoin in the long term. The European Commission reports [110] that it is estimated that Bit­coin’s growth rate by 2140 will converge to zero, with 21 million Bitcoin units circulating. Because of this implicit limitation, economists maintain that the Bitcoin market poses, unlike current legal currencies, a long-term structural issue [111]: it will act as a «(d)eflationary force on the economy since the money supply would not increase in concert with economic growth» [112].

A basic principle of VAT is that the neutrality of taxation requires that all economic activities are in principle subject to it [113]. Fiscal neutrality requires that economic operators carrying out the same operations and transactions should not to be treated differently in the levying of VAT.

The ECJ has been refining the concept of fiscal neutrality and maintains, in the Morgan Fleming Case [114], that tax neutrality does not require identical ope­rations to be applicable, as competition between different operations is enough. Hence, distortion of competition happens when two activities, even if not i­dentical [115], are in competition and are not treated equally for the purposes of VAT [116].

In their 2012 report, the ECB clearly established the differences between electronic money and virtual currencies (Table 2). Their only shared characteristic is that both of them are digital currencies. Again, by not referring in any way to such existing schemes, the ECJ lost an important opportunity to better illustrate their views, provide further clarifications on the interplay among competition, fiscal neutrality and the exemption regime in respect to cryptocurrencies, and advance the discussion.

Table 2. – Differences between electronic money schemes and virtual currency schemes (Source: ECB, 2012) [117]

 

Electronic money

Virtual currency

Format

Digital

Digital

Unit of account

Traditional currency (euro, US dollars, pounds, etc.) with legal tender status

Invented currency (Linden Dollars, Bitcoins, etc.) without legal tender status

Acceptance

By undertakings other than the issuer

Usually within a specific virtual community

Legal status

Regulated

Unregulated

Issuer

Legally established electro­nic money institution

Non-financial private com­pany

Supply of money

Fixed

Not fixed (depends on issuer’s decisions)

Possibility of redeeming funds

Guaranteed (and at par value)

Not guaranteed

Supervision

Yes

No

Types of risk

Mainly operational

Legal, credit, liquidity, and operational

6. Conclusions

Part of the widespread process of digitization of products and services, cryp­tocurrencies, and especially Bitcoin, rely on distributed, peer-to-peer structures that eliminate the middleman, in this case banking institutions and the states, enabling consumers to interact with each other in consumer-to-consu­mer transactions, independently and outside the control of traditional monetary channels [118].

The Skatteverket v. David Hedqvist Case presents a fractured legal landscape: while its conclusions can certainly considered to be sound, and something this author has no trouble agreeing with, both current legislation and doctrine tell us that the legal reasoning that led to them is unclear, incomplete, and prone to produce more confusion and uncertainty in the area.

Both the ECJ and the AG structured their analysis primarily around the nomen juris of currencies, lamenting how multiple translations in the official languages render it a vague and unprecise activity. The choice not to resort to international treaties and secondary EU legislation for the interpretation of what is currency in respect to the VAT Directive is difficult to understand. The International Convention on Currencies, and to any extent the EU and international legal frameworks on currencies, provide very clear, unambiguous, and coherent definitions of currency, money, or payment.

In their ruling on the Skatteverket v. David Hedqvist Case, the ECJ deci­ded for some reason unexplained not to use any of these definitions. This decision seriously hinders their argumentation.

Furthermore, the case fails to dissipate doubts in respect to whether or not any competitive effects between Bitcoin and traditional currency exist, nor it clarifies whether these can be considered similar transactions. This prevents any definitive judgement on whether or not the VAT exemption regime that applies to currencies can also be applied to Bitcoin, and has important legal ramifications as a market for cryptocurrencies emerges and VAT fiscal neutrality has to be preserved.

The Explanatory Memorandum to the Proposal for the Sixth Directive introduced VAT exemption for transactions involving currency back in 1973 [119]: Bitcoin was introduced in 2008 [120], in a radically different world. It seems difficult to maintain that any such regulation could be applied as-is and immedia­tely solve any intervening issue. The problems discussed in the Skatteverket v. David Hedqvist Case have more to do with updating and amending the EU VAT Directive so that the idea of a privately created, peer-to-peer supported, and “unofficial” currency can be framed within a coherent legal discourse [121]. Turning these into a simple problem of linguistic variance is a step in the wrong direction, especially since updating existing EU Directives is also what the Council of the European Union [122] and the EU Commission are planning for other areas of EU legislation, such the Proposal for Amendment of the New Money Laundry Directive 2015/849 for the regulation of virtual currencies [123] that supposedly should include Bitcoin.

Note

[1] NAKAMOTO, Bitcoin: A Peer-to-peer Electronic Cash System, 2008, in https://bitcoin.org/ bitcoin.pdf. For more on peer-to-peer and its impact on VAT taxation, see TRENTA, Rethinking EU VAT for P2P distribution, in EUCOTAX Series in European Taxation, 45, 2015.

[2] VALCKE-VANDEZANDE-VAN DE VELDE, The Evolution of Third Party Payment Providers and Cryptocurrencies Under the EU’s Upcoming PSD2 and AMLD4, Swift Institute, Working Paper n. 2015-001, 2015.

[3] COM(2011) 941 final, Green Paper, Towards an Integrated European Market for Card, In­ternet and Mobile Payments, Brussels, 11 January 2012, par. 1, p. 3.

[4] COM(2010) 245 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A Digital Agenda for Europe. See also TRENTA, The Italian Google Tax, in Tax Law Quarterly, Issue 4, 2014.

[5] COM(2011) 941 final, Green Paper, cit., par. 2.3, p. 5.

[6] COM(2011) 941 final, Green Paper, cit., par. 1, p. 3.

[7] COM(2013) 547 final 2013/0264, (COD) Proposal for a Directive of the European Parliament and of the Council on payment services in the internal market and amending Directives 2002/65/EC, 2013/36/EU and 2009/110/EC and repealing Directive 2007/64/EC, Brussels, 24 July 2013.

[8] COM(2013) 547 final 2013/0264, (COD) Proposal for a Directive of the European Parliament, cit., par. 1, pp. 2-3.

[9] COM(2013) 547 final 2013/0264, (COD) Proposal for a Directive of the European Parliament, cit., par. 5, p. 12.

[10] Value Added Tax Committee, Working Paper n. 854, Subject VAT treatment of Bit­coin, Brussels, 30 April 2015, https://circabc.europa.eu/sd/a/19f564ce-3878-4a61-9b8c-f0dbf545465f/854%20-%20Commission%20-%20VAT%20treatment%20of%20Bitcoin%20 (II).pdf.

[11] Value Added Tax Committee, cit., par. 3.4.2, pp. 6-7.

[12] Case C-264/14, Skatteverket v. David Hedqvist, [2015] ECLI:EU:C:2015:718.

[13] According to mapofcoins.com, there were approximately 667 cryptocurrencies available in the online market in September 2015. http://mapofcoins.com/.

[14] PIASENTE, Esenzione IVA per i “bitcoin: la strada indicata dalla Corte UE interpretando la nozione “divise”, in Il CommentoCorrtrib., n. 2, 2016, p. 141.

[15] ELGEBRANT, Kryptovalutor: särskild rättsverkan vid innehav av bitcoins och andra liknande betalningsmedel, Stockholm, 2016.

[16] MANDJEE, Bitcoin, Its Legal Classification and Its Regulatory Framework, in Journal of Business & Securities Law, 15, Issue 2, 2015.

[17] LAMBOOIJ, Retailers directly accepting bitcoins: tricky tax issues?, in Derivatives and financial instruments, 16, Issue 3, 2014, pp. 138-144.

[18] ELGEBRANT, Bitcoinsdomen-ändamål, vilket och vems?, in Skattenytt, (1), 2016, pp. 68-76.

[19] Case C-264/14, Opinion of Advocate General KokottSkatteverket v. David Hedqvist, [2015] ECLI:EU:C:2015:498, par. 8.

[20] Treaty on the Functioning of the European Union, C 83/47, in OJ, March 30, 2010.

[21] Council Directive 2006/112/EC of 28 November 2006 on the common system of Va­lue Added Tax, in OJ L 347, 11 December 2006.

[22] TFEU, art. 267. See also the Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings OJ C 338, 6 November 2012, pp. 1-6. The reference for a preliminary ruling is a procedure exercised before the Court of Justice of the European Union. The procedure guarantees uniform application of EU law. DE WAELE, Role of the European Court of Justice in the Integration Process: A Contemporary and Normative Assessment, in Hanse Law Review, 6, 2010, pp. 3-26.

[23] LARSSON-LINDGREN ZUCCHINI-KRISTOFFERSSON, Ingen mervärdesskatt på växlingstran­saktioner med bitcoin, in Svensk skattetidning (10), 2015, pp. 817-826.

[24] Italian Tax Agency, Ris. n. 72/E, 2016-09-02, Dir. Centrale Normativa Interpello ai sensi dell’art. 11, legge 27 luglio 2000, n. 212. Trattamento fiscale applicabile alle società che svolgono attività di servizi relativi a monete virtuali. Available at: http://www.agenziaentrate. gov.it/wps/file/nsilib/nsi/documentazione/provvedimenti+circolari+e+risoluzioni/risoluzioni/archivio+risoluzioni/risoluzioni+2016/settembre+2016+risoluzioni/risoluzione+n.+72+del+02+ settembre+2016/RISOLUZIONE+N.+72+DEL+02+SETTEMBRE+2016E.pdf.

[25] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 22. «Article 2(1)(c) of the VAT Directive must be interpreted as meaning that transactions such as those at issue in the main proceedings, which consist of the exchange of traditional currency for units of the “bitcoin” virtual currency and vice versa, in return for payment of a sum equal to the difference between, on the one hand, the price paid by the operator to purchase the currency and, on the other hand, the price at which he sells that currency to his clients, constitutes the supply of services for consideration within the meaning of that article».

[26] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 26.

[27] Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in OJ L 347, 11 December 2006, pp. 1-18, art. 14.

[28] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 24.

[29] TRENTA, Rethinking EU VAT for P2P Distribution, cit.

[30] CENTORE, Qualificazione delle operazioni: le prestazioni di servizi, in Corrtrib., n. 19, 2001, p. 1418. CENTORE, Il presupposto oggettivo delle operazioni IVA, in Corrtrib., n. 9, 2001, p. 664.

[31] SNELL, Goods and Services in EC Law: A Study of the Relationship Between the Freedoms, Oxford, 2002, p. 6. See also ATTEW, Teleological Interpretation and Land Law, in Modern Law Review, 1995, p. 699, as quoted by TRENTA, Rethinking EU VAT for P2P Distribution, cit.

[32] Directive 2006/112/EC, art. 14. See also Case C-320/88, Staatssecretaris van Financiën v. Shipping and Forwarding Enterprise Safe BV, [1990] ECLI:EU:C:1990:61, par. 6.

[33] The intrinsic idea to link money to goods changed in the nineteenth century. In that period «(t)he western economies had traveled a considerable distance from the commodity money standards of the medieval era». REDISH, Anchors Aweigh: The Transition from Commodity Money to Fiat Money in Western Economies, in Canadian Journal of Economics, 1993, pp. 777-795.

[34] EUROPEAN COMMISSION-KANCS-CIAIAN-MIROSLAVA, The Digital Agenda of Virtual Cur­rencies. Can BitCoin Become a Global Currency?, Institute for Prospective and Technological Studies, Joint Research Centre, n. JRC97043, 2015, p. 6. SZCZEPAŃSKI, Bitcoin: Market, economics and regulation, in European Parliamentary Research Service, 2014, pp. 1-9.

[35] Case C-172/96, Commissioners of Customs & Excise v. First National Bank of Chicago, [1998] ECLI:EU:C:1998:354, par. 25.

[36] Case C-264/14, Skatteverket v. David Hedqvist, cit., parr. 29-31.

[37] For a more extensive discussion of barter and consideration, see TRENTA, Rethinking EU VAT for P2P distribution, cit.

[38] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 21.

[39] CAPACCIOLI, Bitcoin: le operazioni di cambio con valuta a corso legale sono prestazioni di servizio esenti, in Il Fisco, n. 44, 2015.

[40] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 34. The ECJ quoted on that point Case C-453/05, Volker Ludwig v. Finanzamt Luckenwalde, [2007] ECLI:EU:C:2007:369, par. 21. Case C-259/11, DTZ Zadelhoff vof v. Staatssecretaris van Financiën, [2012] ECLI:EU:C: 2012:423, par. 20.

[41] For more on VAT exemption, see MONTANARI, Le operazioni esenti nel sistema dell’IVA (Exemptions in the VAT System), Torino, 2013.

[42] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 37. The ECJ quoted on that point Case C-455/05, Velvet & Steel Immobilien und Handels GmbH v. Finanzamt Hamburg-Eimsbüttel, [2007] ECLI:EU:C:2007:232, parr. 21-22. Case C-461/12, Granton Advertising BV v. Inspecteur van de Belastingdienst Haaglanden/kantoor Den Haag, [2014] ECLI:EU:C: 2014:1745, par. 29.

[43] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 42.

[44] Directive 2006/112/EC, art. 135 (1) (e), «Member States shall exempt the following transactions (...), including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors’items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest».

[45] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 44.

[46] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 45. The ECJ quoted on that point Case C-189/11, European Commission v. Kingdom of Spain, [2013] ECLI:EU:C:2013: 587, par. 56.

[47] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 46.

[48] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 49.

[49] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 51.

[50] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 53.

[51] Directive 2006/112/EC, art. 1 (2), «The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged». Case 230/87, Opinion of Mr Advocate General Cruz VilaçaNaturally Yours Cosmetics Limited v. Commissioners of Customs and Excise [1988] ECR 6365, par. 16. COM (73) 950 final, Common system of value added tax: uniform basis of assessment. Proposal for a sixth Council Directive on the harmonization of Member states concerning turnover taxes, Explanatory Memorandum to the Proposal for the Sixth Directive, in Bulletin of the European Communities, Supplement 11/73, p. 8.

[52] WOLF, Bitcoin and EU VAT, in International VAT Monitor, 25, n. 5, 2014, pp. 254-257.

[53] MIRRLEES, Tax by Design: The Mirrlees Review, 2, Oxford, 2011, p. 196. See also KERRIGAN, The Elusiveness of Neutrality – Why is it so Difficult to Apply VAT to Financial Services?, in International VAT Monitor, 21, n. 2, 2010, pp. 103-112.

[54] WOLF, op. cit., pp. 254-257.

[55] Case C-172/96, Commissioners of Customs & Excise v. First National Bank of Chicago, cit.; BUCCI-FARANO, Rassegna di giurisprudenza comunitaria in materia di IVA, in Rasstrib., n. 2, 2000, p. 673.

[56] WOLF, op. cit., pp. 254-257, quoting REVENUE & CUSTOMS, Tax Treatment of Activities Involving Bitcoin and Other Similar Cryptocurrencies, in Revenue & Customs Brief, 09/14.

[57] MIRRLEES, op. cit., p. 199.

[58] EUROPEAN CENTRAL BANK, Virtual Currency Schemes, October 2012, p. 13.

[59] DRAGHI, European Central Bank, Re: Your letter (QZ-125), 2015. in http://www.ecb. europa.eu/pub/pdf/other/151022letter_kaili.en.pdf.

[60] Virtual currencies scheme.

[61] Payment service directive.

[62] Electronic money directive.

[63] EUROPEAN CENTRAL BANK, Virtual currency schemes – A further analysis, 2015, pp. 23-24.

[64] EUROPEAN CENTRAL BANK, Virtual currency schemes – A further analysis, cit., p. 25.

[65] 98/415/EC: Council Decision of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, in OJ L 189, 3 July 1998, pp. 42-43.

[66] VAT Commitee, Working Paper n. 854, Question concerning the application of EU VAT provisions, April 2015, par. 3.2, p. 4. https://circabc.europa.eu/sd/a/19f564ce-3878-4a61- 9b8c-f0dbf545465f/854%20-%20Commission%20-%20VAT%20treatment%20of%20Bitcoin %20(II).pdf.

[67] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 12.

[68] International Convention for the Suppression of Counterfeiting Currency, League of Nations, Treaty Series, 112, 1929, p. 371.

[69] Council Framework Decision 2000/383/JHA of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro, in OJ L 140, 14 June 2000, pp. 1-3.

[70] 2001/887/JHA, Council Decision of 6 December 2001 on the protection of the euro against counterfeiting, in OJ L 329, 14 December 2001, pp. 1-2.

[71] Reg. (EU) n. 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union, in OJ L 174, 26 June 2013.

[72] Directive 2014/62/EU of the European Parliament and of the Council of 15 May 2014 on the protection of the euro and other currencies against counterfeiting by criminal law, and replacing Council Framework Decision 2000/383/JHA, in OJ L 151, 21 May 2014, pp. 1-8.

[73] 2001/413/JHA: Council Framework Decision of 28 May 2001 combating fraud and counterfeiting of non-cash means of payment, in OJ L 149, 2 June 2001, pp. 1-4.

[74] Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electro­nic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC, in OJ L 267, 10 October 2009, pp. 7-17.

[75] Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Reg. (EU) n. 1093/2010, and repealing Directive 2007/ 64/EC (Text with EEA relevance), in OJ L 337, 23 December 2015, pp. 35-127. In respect to the inapplicability of repealed Directive 2007/64/EC to Bitcoin, see HENKOW, VAT and Virtual Reality: How Should Crypto Currencies Be Treated for VAT Purposes?, in LAMENSCH-TRA­VERSA-VAN THIEL (eds.), Value Added Tax and the Digital Economy: The 2015 EU Rules and Broader Issues, in Eucotax Series, 46, 2015, pp. 135-147.

[76] Directive (EU) 2015/2366, whereas 22th: «The definition of payment services should be technologically neutral and should allow for the development of new types of payment services, while ensuring equivalent operating conditions for both existing and new payment service providers».

[77] Directive (EU) 2015/2366, whereas 4th, «Many innovative payment products or services do not fall, entirely or in large part, within the scope of Directive 2007/64/EC».

[78] VALCKE-VANDEZANDE-VAN DE VELDE, op. cit.

[79] VANDEZANDE, Between Bitcoins and Mobile Payments: Will the European Commission’s New Proposal Provide More Legal Certainty?, in International Journal of Law and Information Te­chnology, 2014, pp. 1-16.

[80] VALCKE-VANDEZANDE-VAN DE VELDE, op. cit.

[81] Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Reg. (EU) n. 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, in OJ L 141, 5 June 2015, pp. 73-117.

[82] Directive (EU) 2015/849, art. 3 (16): «“electronic money” means electronic money as defined in point (2) of Article 2 of Directive 2009/110/EC». See Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC, in OJ L 267, 10 October 2009, pp. 7-17. Under art. 2(2) of this Directive, “electronic money” means «electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Article 4 of Directive 2007/64/EC, and which is accepted by a natural or legal person other than the electronic money issuer». The condition “issued on receipt of funds” excludes the Bitcoin currencies from the aim of this Directive.

[83] EU Commission, Inception impact assessment, Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (text with EEA relevance), April 2016. See also: COM(2016) 50/2, Communication from the Commission to the European Parliament and the Council on an Action Plan for strengthening the fight against terrorist financing. Brussels, XXX. p. 5; EU Commssion List of planned Commission initiatives, 7 March 2016, p. 80. http://ec.europa.eu/atwork/pdf/ planned_commission_initiatives_2016.pdf.

[84] EUROPEAN COUNCIL COUNCIL OF THE EUROPEAN UNION, Conclusions on the Fight Against the Financing of Terrorism, 12 December 2016.

[85] HE-HABERMEIER-LECKOW-HAKSAR-ALMEIDA-KASHIMA-KYRIAKOS-SAAD-OURA-SEDIK-STETSENKO-YEPES, Virtual Currencies and Beyond: Initial Considerations (No. 16/3)International Monetary Fund, 2016, p. 7.

[86] Case C-343/89, Max Witzemann v. Hauptzollamt München-Mitte, [1990] ECLI:EU:C: 1990:445.

[87] Council Framework Decision 2000/383/JHA of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro, in OJ L 140, 14 June 2000, pp. 1-3.

[88] Council Framework Decision 2000/383/JHA. See Recital n. 5, «the provisions of the International Convention of 20 April 1929 for the Suppression of Counterfeiting Currency and its Protocol should be taken into account». See also Recital n. 6, artt. 1, and 7.

[89] Case C-516/13, Dimensione Direct Sales Srl and Michele Labianca v. Knoll International Spa, [2015] ECLI:EU:C:2015:315, par. 23.

[90] WOUTERS-ODERMATT-RAMOPOULOS, Worlds Apart? Comparing the Approaches of the European Court of Justice and the EU Legislature to International Law, in CREMONA-THIES (eds.), The European Court of Justice and external relations law: constitutional challenges, Oxford, 2014, pp. 249-268.

[91] Case 283/81, Srl CILFIT and Lanificio di Gavardo SpA v. Ministry of Health, [1982] ECLI:EU:C:1982:335, par. 20.

[92] Case 49-71, Hagen OGH v. Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1972] ECLI:EU:C:1972:6, par. 6. See also SCHERMERS-WAELBROECK, Judicial protection in the European Union, Hague-London-New York, 2001, p. 147.

[93] Case 154/80, Staatssecretaris van Financiën v. Association coopérative “Coöperatieve Aar­dappelenbewaarplaats GA”, [1981] ECLI:EU:C:1981:38, par. 9. See also SCHERMERS-WAEL­BROECK, op. cit., p. 147.

[94] EU Commission, Economic and Financial Affairs, Euro legal tender. http://ec.europa.eu/ economy_finance/euro/cash/legal_tender/index_en.htm.

[95] EUROPEAN CENTRAL BANK, Virtual currency schemes – A further analysis, cit., pp. 23-24.

[96] EUROPEAN BANKING AUTHORITY, Warning to Consumers on Virtual Currencies, 12 December 2013, in https://www.eba.europa.eu/documents/10180/598344/EBA+Warning+on+ Virtual+Currencies.pdf.

[97] ELGEBRANT, Bitcoinsdomen-ändamål, vilket och vems?, cit., pp. 68-76.

[98] Case C-264/14, Opinion of Advocate General KokottSkatteverket v. David Hedqvist, cit., par. 41.

[99] Case C-264/14, Skatteverket v. David Hedqvist, cit., par. 49.

[100] OECD, Roundtable on market definition, Directorate for Financial and Enterprise affairs competition committee, Note by the Delegation of the European Union, 2012, par. 3, p. 3.

[101] Commission Notice on the definition of relevant market for the purposes of Community competition law (97/C 372 /03), in OJ C 372, 9 December 1997, pp. 5-13, par. 2 (7), p. 6.

[102] MELISCHEK, The relevant market in international economic law: a comparative antitrust and GATT analysis (Vol. 11), Cambridge, 2013, p. 139. Case 356/85, Commission of the European Communities v Kingdom of Belgium, [1987] ECLI:EU:C:1987:353, par. 11.

[103] Case 27/76, United Brands Company and United Brands Continentaal BV v. Commission of the European Communities. – Chiquita Bananas, [1978] ECLI:EU:C:1978:22, par. 33.

[104] Case C-363/05, JP Morgan Fleming Claverhouse Investment Trust plc and The Association of Investment Trust Companies v. The Commissioners of HM Revenue and Customs, [2007] ECLI:EU:C:2007:391, par. 46.

[105] Case C-109/02, Commission of the European Communities v. Federal Republic of Germany, [2003] ECLI:EU:C:2003:586, par. 20.

[106] Case 170/78, Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland, [1980] ECLI:EU:C:1983:202, par. 6.

[107] ZHAO, Cryptocurrency Brings New Battles into the Currency Market, Future Internet (FI) and Innovative Internet Technologies and Mobile Communications (IITM), 2015, pp. 91-99.

[108] ROGOJANU-BADEA, The Issue of Competing Currencies. Case study – Bitcoin, in Theoretical and Applied Economics, 21, n. 1, 2014, pp. 103-114.

[109] DREHMANN-GOODHART-KRUEGER, The Challenges Facing Currency Usage: Will the Traditional Transaction Medium Be Able to Resist Competition from the New Technologies?, in Economic Policy, 17, n. 34, 2002, pp. 193-228.

[110] EUROPEAN COMMISSION-KANCS-CIAIAN-MIROSLAVA, op. cit., p. 6. SZCZEPAŃSKI, op. cit., pp. 1-9. See also BAL, Bitcoin Transactions: Recent Tax Developments and Regulatory Responses, in Derivatives and Financial Instruments, 17, n. 5, 2015.

[111] YERMACK, Is Bitcoin a Real Currency? An Economic Appraisal, no. w19747, in National Bureau of Economic Research, 2013.

[112] YERMACK, op. cit. See also BADEV-CHEN, Bitcoin: Technical Background and Data Ana­lysis, Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington D.C., 2014.

[113] SWINKELS, The Tax Liability of Public Bodies under EU VAT, in International VAT Monitor, 20, n. 5, 2009, p. 373.

[114] Case C-363/05, JP Morgan Fleming Claverhouse Investment Trust plc, cit., par. 46.

[115] SLOANE, Crossed Wires in Luxembourg: Hutchison 3G & the Competition Test in VAT, in The Tax Journal, n. 895, 2007, p. 7.

[116] Case C-363/05, JP Morgan Fleming Claverhouse Investment Trust plc, cit., par. 47.

[117] EUROPEAN CENTRAL BANK, Virtual Currency Schemes, October 2012, Table n. 2, p. 16.

[118] DERMAN, The Age of Cryptocurrency, How Bitcoin and Digital Money Are Challenging the Global Economic Order, New York, 2015.

[119] COM (73) 950 final, Common system of value added tax: uniform basis of assessment. Proposal for a sixth Council Directive on the harmonization of Member states concerning turnover taxes, Explanatory Memorandum to the Proposal for the Sixth Directive, in Bulletin of the European Communities, Supplement 11/73, p. 8. See Title X, art. 14, (B), Other exemptions.

[120] NAKAMOTO, op. cit.

[121] See also CAPACCIOLI, Regime impositivo delle monete virtuali: poche luci e molte ombre, in Il Fisco, n. 37, 2016, p. 3538. The author quotes also the preparatory work of the European Commission, COM(2016) 450 final, Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC, Strasbourg, 5 July 2016.

[122] EUROPEAN COUNCIL COUNCIL OF THE EUROPEAN UNION, Conclusions on the fight against the financing of terrorism, 12 February 2016.

[123] COM(2016) 50/2, Communication from the Commission to the European Parliament and the Council on an Action Plan for strengthening the fight against terrorist financing, Brussels, XXX. p. 5.