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Portuguese Crypto Tax Document

Diploma: CIVA

Article: Article 9 (27) (d)

Subject: Exemptions - Cryptocurrency pay is subject to provision of services

VAT, but exempt.

Case: No. 14436, by order of 2019-07-03, of the Director of VAT Services, (by


Content: With reference to the present request for binding information requested by

under Article 68 of the General Tax Law (LGT), it should be stated:

I - Order

1. The Applicant intends to make an investment for the creation of

cryptocurrency. With a view to your decision making you want the clarification

accounting and tax framework of the business creation activity


2. The Applicant clarifies that the creation of cryptocurrency is usually

designated mining. Mining requires processors

(computers) for the handling and organization of transactions carried out or

posted on the internet. The information related to these transactions is

compiled as "blocks". The accumulation of information in the form

"blocks" gives rise to the blockchain, which acts as a logbook

of the transactions performed.

3. The organization of the transactions referred to in "block" forms and their

blockchain sign-up guarantees "pay" through cryptocurrency,

created specifically for this purpose. Cryptocurrency can be exchanged for

"real" currency according to its market value and may be used as a

means of payment from vendors that accept the cryptocurrency.

4. Revenues of the entity that carries out the "mining activity"

result from cryptocurrency compensation for the organization of transactions

in the form of "blocks" and exchanging this cryptocurrency for "real"

5. According to the Applicant, the activity identified above is not performed

to anyone in particular. The main expenses of the "mining activity"

from the initial investment required in computer equipment,

energy consumption for the operation and cooling of processors

and the lease / acquisition of the space required for the placement of


6. The Applicant intends to clarify the accounting framework and

VAT, of "mining activity".

7. The Applicant states that there are two recipes with "mining", the exchange

cryptocurrency by "real" currency and the miner's remuneration in


8. In the first case, the Applicant considers that we are facing an exemption

VAT pursuant to Article 9 (27) (d) of the VAT Code.

Case No. 14436 2

9. In the second case, the Applicant raises a number of doubts: whether the

remuneration in cryptocurrency constitutes a provision of services on behalf of

VAT; considering a provision of services, what type of service should be

considered for localization purposes; who is considered the

acquirer of this service and what is the taxable amount of the operation.

II - Background

10. Article 9 (27) (d) of the CIVA is based on Article 135.

paragraph 1 (e) of Council Directive 2006/112 / EC of 28 November

2006 (VAT Directive), according to which Member States exempt from tax

"(a) transactions, including trading, in respect of currencies, currency and

currency of liberatory value, except coins and collection notes,

gold, silver or other metal coins, and

banknotes which are not normally used for their liberatory value or which

have a numismatic interest. "

11. The national rule provides that they are exempt from VAT.

dealing in foreign currency, banknotes and

coins, which are normally used as such, or which have been

numismatic interest. "

12. As regards the provisions of Article 135 (1) (e) of the VAT Directive, the

Court of Justice of the European Union (CJEU), in its judgment in Case

delivered on 22 October 2015 in Case C-264/14, in which it

At issue was a dispute between the Skatteverker (Swedish Tax Administration)

and David Hedqvist, on the basis of a prior opinion given by the Commission of

Tax Law (Skatterättsnämnden) on the subjection of value added tax to

of traditional currency exchange operations by the currency

bitcoin, or vice versa, which David Hedqvist intended to carry out by

through a society.

13. In the abovementioned case, the ECJ stated that:

1) Article 2 (1) (c) of Council Directive 2006/112 / EC of 28

November 2006 concerning the common system of value added tax

should be interpreted as constituting benefits

services for consideration within the meaning of that provision, transactions,

such as those at issue in the main proceedings, which consist of the exchange

traditional currency units per bitcoin virtual currency, and vice versa,

an amount corresponding to the margin

difference between, on the one hand, the price at which the operator concerned

concerned buys the currency and, on the other, the price at which it sells it to its


2) Article 135 (1) (e) of Directive 2006/112 should be interpreted as

provision of services such as those at issue in the proceedings

principal, which consist of the exchange of traditional currencies by units of the

bitcoin, and vice versa, on payment of a

corresponding to the margin consisting of the difference between, for a

on the one hand, the price at which the trader in question buys the currency and, on

price at which it sells them to its customers are transactions exempt from

value added tax within the meaning of that provision.

Case #: 14436 3

14. In the present case, the CJEU considered bitcoin as a means of

payment method used in a manner analogous to the means of payment with

consequently, these transactions as subject to VAT are still subject to

which exempt him.

15. Having regard to the decision of the CJEU in the abovementioned case, the

exchange of cryptocurrency for "real" currency constitutes a provision of

for consideration, exempt from VAT pursuant to point (d) of

27) of Article 9 of the CIVA.

16. With regard to remuneration on cryptocurrency, this being "currency"

a means of contractual payment, we recall the text of the next judgment

referred to in this information. Regarding the possibility of applying the

Article 135 (1) (e) of the VAT Directive only to transactions concerning

traditional currency or, on the contrary, also covers

other currencies, it is stated that "(…) the exemptions provided for in Article 135,

(1) (e) of the VAT Directive are intended in particular to alleviate the

difficulties in determining the taxable amount and the amount of VAT

deductible, which arise in the context of financial transactions. However, the operations

relating to non-traditional currencies, ie several of the currencies with a

in one or more countries constitute financial transactions provided that

these currencies have been accepted by the parties to a transaction as a means of

alternative payment to the means of liberatory value and have no other

purpose other than as a means of payment. (…) It is therefore clear from the context

and purpose of Article 135 (1) (e), that an interpretation of the

that provision concerns only operations

relating to traditional currencies would amount to depriving that provision of a

part of its effects. "

17. Accordingly, adhering to the arguments used by the ECJ, it is considered that

whereas cryptocurrency remuneration is a service subject to VAT

whereas Article 9 (27) (d) of the CIVA covers not only the

operations relating to the traditional currency, but also operations relating to the


18. With regard to the location of operations, and since the form of

as the question is raised does not allow the individual transactions to be

we refer to the clarifications provided in Circulars no.

30164 of 12/11/2014, from the VAT Tax Management Area - Office of the

Deputy Director-General and 30165 of 12/26/2014 of the VAT Services Directorate

are available for consultation on the Finance Portal.

19. With regard to accounting framework issues, the following

are outside the scope of the Tax Management Area


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