VAT & Digital Services: European Commission on NFTs and Implications from OnlyFans EUCJ Case


VAT Treatment of NFTs:

The European Commission has published Working Paper 1060, offering initial insights into the VAT treatment of non-fungible tokens (NFTs). 

The document aims to collect input from Member States to establish a consensus on NFTs’ VAT treatment. It emphasizes the complexity of NFTs, highlighting the following points:

  • NFT VAT treatment necessitates case-by-case analysis based on underlying services.
  • Different VAT treatments, such as electronic services or vouchers, may apply depending on the situation.
  • VAT treatment for various NFT ecosystem operations (minting fees, gas fees, marketplace fees) requires thorough analysis.

In light of these complexities, it is crucial for businesses involved with NFTs to stay informed on the latest developments and carefully assess the VAT implications of their operations.

VAT Liability for Platforms Providing Digital Services:

In a case not directly related to NFTs, the Court of Justice of the European Union (CJEU, C-695/20) ruled that the OnlyFans adult platform must collect VAT on transactions conducted via the platform, as it acts as an intermediary. 

This judgment serves as a reminder for all digital sector operators to carefully assess their operations, as they may potentially be responsible for collecting VAT as intermediaries. If NFTs are considered electronic services, the trading platform could be held accountable for collecting the applicable VAT on transactions.

In conclusion, tax authorities are closely monitoring developments in digital services, NFTs, and related operations. Concurrently, European initiatives (e.g., MiCA, DAC8) aim to increase transparency in crypto transactions. As a result, businesses and individuals in the digital and crypto space must stay informed and ensure compliance with evolving regulations. If you have any questions or require assistance in navigating this complex landscape, our team of experts is here to help and provide guidance tailored to your specific needs.