ForexMinute.com — On January 1st this year, the European Union announced new VAT laws, which are indirectly posing troubles for Bitcoin businesses.
According to the new laws, European companies that offer electronic services and goods are bound to provide government the information of their customers’ countries, if the latter resides in a EU nation. This step is added to make sure that proper VAT is paid in countries where the purchased products are being consumed.
Before the introduction of this amendment, EU-based companies were evading taxes by opening up offices in nations with low-to-no VAT. And due to the trading treat, they were still able to sell their products throughout the Europe while paying as little tax as possible.
How if Effects Bitcoin Businesses
The new EU VAT laws somewhat impacts businesses which accept Bitcoin, only because they require their customers’ identity to be revealed. Therefore, any person wishing to pay using Bitcoin will be required to deposit his proof of residence. Conversely, a company accepting Bitcoin will also be required to reveal where it puts up.
CoinDesk reporter Aaron van Wirdum spoke to Richard Croker, the Head of Corporate Tax at London-based law firm CMS, to receive more professional insight. Croker said:
“Due to the inability to identify a buyer or his location, taking payments in bitcoin might be partially incompatible with these new laws. Whether it’s a total drag on the market I don’t know, but it’s certainly a disincentive for companies to accept bitcoin.”
On the other hand, European Commission spokesperson Vanessa Mock said:
“All a company needs to establish is the country of residence of their customers. This can be done in a number of ways that don’t include a buyers’ identity. After a customers’ country of residence has been established, using a potentially anonymous method of payment like bitcoin shouldn’t pose a problem.”
The matter could only be cleared by going through future case studies. However now, paying via Bitcoin seems like a bad option in Europe, if you wants to remain anonymous.