The last developments of the digital economy and bitcoins as a ‘stress test’ for the EU VAT system

The BEPS project highlights the relevance of the challenges posed by the digital economy. The OECD notes that, because the digital economy is increasingly becoming the economy itself, it is not feasible to ringfence it from the rest of the economy for tax purposes. To a certain extent, this risk is inherent to the EU VAT system. In this article, the author uses virtual currencies as a ‘stress test’ for the actual EU VAT system, with the aim of pinpointing some of its weaknesses in respect of the digital economy. Having summarised the recent developments within EU and OECD context, the author proposes an analysis of what virtual currencies and mining activities ‘are’ under the current VAT, and how they could be treated. Finally, the author proposes and analyses a set of possible solutions. He goes from solutions based on the interpretation of current VAT legislation, which could be accepted by the CJEU in the pending case Hedqvist (C-264/14), to an innovative idea that would imply a radical change of the current system. This contribution tackles the current pattern of the categories ‘good’ and ‘service’.