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Business activities within the meaning of VAT and sale of cryptocurrencies

Presentation of the facts of the judgment

The case concerned an entity that in 2011 and 2013 purchased virtual currency in the form of cryptocurrencies and then in 2013 sold them. The transactions took place on several stock exchanges in Poland, Japan and the United Kingdom, among others.

The applicant carried out approximately several thousand transactions in 2013. In accordance with the specific nature of cryptocurrency exchanges, the sales were made to anonymous purchasers who could not be directly identified. At the same time, the applicant did not keep accounting records of the transactions it made for the purchase and sale of Bitcoin.

The applicant also did not register or report the transactions made to the tax authorities and did not register his business activity. This then was the basis for asking the question in the form of an individual interpretation.

In the opinion of the tax authority

The authority asserted that the sale of cryptocurrencies is a service within the meaning of VAT, which at the same time would be exempt from this tax as an intermediary service.

Additionally, the authority pointed out that the complainant acted as a VAT payer, attributing all the necessary characteristics of such activity as indicated in Article 15(2) of the VAT Act. Namely, the activity in the years 2011 and 2013 was deemed to be continuous, and the indicated number of transactions (approximately one hundred) was treated as a constant intention to obtain income, and on top of that, all activities were directed for profit-making purposes.

Consequently, the case went to court. The Court emphasised that the sole fact of carrying out numerous Bitcoin transactions could not be decisive for recognising him as a VAT payer, as due to the specificity it often does not depend on the person carrying out the transactions. In the first instance, the court also did not notice the features of constancy and regularity or organisation in the activity. On average, the appellant carried out a maximum of two orders per week, which, in the opinion of the court, was neither constant nor regular, assuming that this took place during 2011 and 2013. The risk in operating on the cryptocurrency market was fully on the side of the seller, who conducted settlements on his own account.

Judgment of the NSA

The subject was waiting for a relatively long time to be resolved by the court of second instance, but finally the NSA took the side of the appellant with common sense and upheld the opinion of the WSA.

The Supreme Administrative Court assessed that the quantitative analysis of transactions conducted by the court of first instance did not constitute interference in the factual state presented in the application for interpretation, but expressed its own conclusions. However, they did not constitute the basic premise for the position that the activity of the Applicant was not conducted in conditions corresponding to Article 15(1) and (2) of the VAT Act.

The presented arguments of the Supreme Administrative Court with respect to the assessment that the Appellant did not act as a VAT payer when purchasing and selling Bitcoins did not take into account the calculations of the Court of First Instance. Therefore, they did not affect the result of the case.

Business activity under the VAT Act

Pursuant to Article 15(2) of the VAT Act, economic activity includes any activity of producers, traders or service providers, including natural resource extraction entities and farmers, as well as activity of persons performing freelance jobs. Business activity includes in particular activities consisting in using goods or intangible and legal assets in a continuous manner for profit-making purposes.

This definition is therefore characterized by a certain universality, reaching everyone who participates in economic turnover. The broad definition of economic activity and the relative non-specific guidelines result in the fact that all activities performed, regardless of their form, are treated under the definition of a taxpayer. Despite the fact that it is not included directly in the act, economic activity must be characterised by professionalism, which was evidently lacking in the analyzed case.

Additionally, economic activity does not have to be conducted in order to achieve profit, but, on the other hand, an entity conducting only gratuitous activities will not be deemed to be a VAT payer. The activity also does not have to show any visible effects, in a word, it is not connected with its result.

It is worth remembering that this is not the only definition of economic activity contained in tax acts.


The case dealt with by the court is characterised by a relatively specific factual situation, as evidently the purchase and sale transactions were carried out on an occasional basis.

The question arises, however, what if a person semi-professionally or on a daily basis manages transactions conducted on cryptocurrencies. Then, it seems that the judgment could move in the direction of the approach proposed by the tax authorities, assigning the characteristics necessary for the activities of a taxpayer under Article 15 of the VAT Act.

Settlement of ad hoc transactions and treating it as an additional form of acquiring money seems to be already clarified in this respect and free from the obligation to have the status of a VAT taxpayer within the meaning of the VAT Act.

However, the matter requires further consideration and each case should be analysed separately.

Judgment of the Supreme Administrative Court of 19 August 2021 ref. I FSK 590/18