There are many activities and tools that go around. Cryptocurrency And on cryptoassets Usually one of the new frontiers that have opened up concerns. NFTi.e. i Non-fungi tokensOf which, although they are proliferating, it is complicated to be able to give a definition. In this Crypto-Asset Reporting Framework (CARF) – A 2022 document prepared on the mandate of the G20.OECD Addressed the topic of cryptocurrencies with a specific objective: to try to make the market transparent and try to stop the erosion of the tax base. This objective is automatically achieved with the introduction of certain reporting and information sharing obligations, but is limited to clarity. NFT come on Unique and non-fingerprint digital The main purpose of which is to confirm and guarantee. PropertyiAuthenticity AndIndividuality A digital asset. and allow users to access content and events.
NFTs are considered and commonly used as deities. Collectables. And in many cases they are used for payments and investments. This is why the OECD recommends an approach. Look throughwhich includes concrete case analysis, which, first, rewards substance over form.
Management of cryptocurrencies, NFTs for VAT purposes
Definitely an interesting test of cryptocurrencies NFTs from VAT point of viewOn which VAT Committee of the European UnionOn February 21, 2023, published an interesting paper titled First thoughts on non-fungible tokens (NFTs).. We are talking about what is currently a real one. Work is in progressThe aim is to ensure that Member States adopt a common position on the VAT treatment of NFTs, the use of which, as we have seen, is closely related to cryptocurrencies.
EU legislation has not provided, at least for the moment, An Official Definition of NftEven cryptocurrency exchanges and their use have grown exponentially over the past few years. Analyzing the trend, however, NFTs are described as gods. Cryptoassets that represent rights to underlying assets.so-called assets, which can be physical or, more commonly, digital, such as a photograph, a piece of music or a work of art.
NFT differs from NFT as it is unique and non-fingerprint. cryptocurrency. Nft is characterized by a. Identification codewhich serves to uniquely identify the token. It is also identified by the metadata that refers to the specific asset.
But this is not enough: A smart contract is incorporated by Nft.. It is a document written in computer code, the purpose of which is to identify and automate certain rights and obligations of the buyer and seller. The contract must be used when the NFT is created or sold, such as a royalty that compensates the creator whenever the NFT is actually sold.
The question, strictly from fiscal and VAT point of view, Whether the NFT currently belongs to the world of services or goods.. The document prepared by the VAT Committee starts from the assumption that NFTs are considered gods in the current majority opinion. Electronic servicesan opinion arising from the broad definition provided by Article 7, par. 1 Implementing Regulations No. 282/2011, according to which:
Services provided by electronic means include services provided via the Internet or an electronic network whose nature makes the provision essentially automatic and which involves minimal human intervention, which guarantees It is impossible in the absence of information technology.
Limits of identity
In any case, as far as NFTs are concerned, qualification Digital service It cannot be generalized, as it is important to verify how the device behaves in concrete cases. The VAT Committee document, in this case, appears to adopt the practical approach directly recommended by the OECD.
In many cases, even when they are closely related to cryptocurrencies, NFT can be considered as a Property title. This assumption is confirmed if the device is used as Simple means or proof thereof Transfer of the owner’s right to dispose of a service or good.. In a certain sense it can be equated to a notarial certificate. In the event that this event arises, the same VAT rules that apply to the transfer of any goods or services should apply.
Other times, however, the NFT may be the same. Single use or multi-use vouchersuch as when it allows its owner to use a certain good or service while he uses it and after the NFT is completely removed from circulation. In this case the transfer of single use voucher should be treated as one. Sale of goods Or one Provision of ServicesWhereas the actual delivery has nothing to do with VAT purposes.
But not only that. NFT can be considered. Consists of several elements.One of which is primary and the other is subsidiary: The primary token is a related subsidiary asset or underlying asset such as a cryptocurrency. Following the maxim The accessory follows the principal.the VAT treatment of the main element applies to the accessory element (Cgue, Order of 25 February 1999, Case C-349/96).
When should VAT be applied on NFT?
If NFT is the main factor, in other words, VAT must be applied.. However, there is a different case in which The token is the key elementAs in the hypothesis that much of the NFT’s value lies in its uniqueness. Since the digital token is delivered entirely over the Internet with minimal human intervention, it should be considered strictly from a VAT point of view. Electronic Service.
To clarify which VAT treatment should apply to NFTs, in Italy,Revenue Agencythrough Circular No. 30 dated 27 October 2023who spoke on the topic of tax treatment of cryptocurrencies.
AE defines the token.Title deedwhich is identified by a certificate of authenticity written on an asset’s blockchain, has the characteristic of being a unique asset. It seems to lean towards the circular thesis that sees NFT as consisting of two elements, which play a leading or supporting role according to the interests of the parties.
Therefore, VAT rules should be applied to electronic services if they are basic. Digital nature. If, however, the underlying is a tangible asset, the transfer of the NFT is governed by the VAT regulations of that asset.