Peter Varga lectured on crypt and VAT at the Slovak Chamber of Tax Advisors

Peter Varga lectured on VAT and crypto-assets during the traditionally held methodical days at the Slovak Chamber of Tax Advisors. In addition to approximately 200 tax advisors and other members of the public, the event was also attended by representatives of the Financial Administration and the Ministry of Finance of the Slovak Republic. It was perhaps the first lecture in such a form and at such a forum on this dynamically developing and complex topic ever.

The topic of VAT and crypto is significantly profaned by the CJEU’s first crypto ruling in the Hedqvist case. Indeed, in the wider public, the crypto business is considered “not subject to VAT” precisely because of the aforementioned 2015 ruling. However, the field of crypto-assets is constantly changing and adding new and novel elements to its complexity. Thus, this decision cannot be applied to any crypt relationships in today’s widespread practical realities.

In our legal and tax and accounting practice alone, we have encountered several projects where such simplification is not an option at all. For example:

• ITOs with an investment component of issued tokens;
• STOs with a utility component of issued tokens;
• intermediation services provided by exchange platforms;
• mining crypto-assets;
• digital wallet services;
• supplies of goods/services paid for in the crypt.

And this is where VAT considerations can be key in deciding on the structure or jurisdiction of a particular project. Just for a traditional issue of so-called “VAT”, the VAT rules may also be a factor in the decision-making process. In the case of utility tokens sold at a price higher than the real value of the service/good in question (i.e. utility), an incorrectly set up VAT regime of issuance can have fatal effects on the feasibility/profitability of the project.

The lecture was also attended by representatives of the Financial Administration and the Ministry of Finance of the Slovak Republic, which inevitably increased the legitimacy of the lecture’s outputs. VAT is an area that is highly harmonised by European Union law. Therefore, any outcomes or conclusions on the topic can be seen as applicable in other jurisdictions of the European Union.

There is no recording available of the lecture in question. However, if you have any questions, please do not hesitate to contact us.