Initial coin offerings and VAT

Etienne Wong

Question

My client Bob lives in the UK. He is not a taxable person for VAT purposes. In September 2017 he bought some bitcoins. He is an investor and does not trade in them. He is now considering investing some of his bitcoins in an (as yet to be identified) initial coin offering (ICO) – a wholly digital means of raising finance – subscribed for in bitcoin (or other cryptocurrencies) rather than fiat currencies. Bob has been looking at ICOs based in Switzerland Singapore and Hong Kong and wants to know what (if any) VAT issues would arise if he were to proceed with such an investment.

Answer

As a bitcoin investor (rather than trader) Bob would whenever he disposes of his bitcoins only be exercising his right qua owner; therefore when he invests in the...

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