The Blockchain Arbitration Society, through one of its founding law firms (Ferrer-Bonsoms and Sanjurjo, lawyers) requested a report from the Treasury of Navarra (Spain) on the subjection to VAT tax of commissions generated in a decentralized Exchange platform.
The doubt arises because cryptocurrencies have been considered a legal means of payment. Therefore the effects of VAT tax, they are like a currency. This was pointed out by the Judgment of the High Court of Justice of the European Union of October 22, 2015.
In the case of a DAO, which is a decentralized exchange or (DEX), and which has an AMM (Automated Market Maker), would the commissions charged by the issuing company -as agreed in the DAO- for the use made of the platform be subject to or exempt from Value Added Tax? Specifically, Article 17.1 paragraph 14 of the Foral Law 19/1992, of December 30, 1992, on Value Added Tax must be assessed. A similar norm is the one that regulates the regulation in Spain; although the consultation was made in the competent entity to the fiscal domiciliation of the consulting company.
Answer from the Regional Treasury on VAT on commissions generated on an Exchange platform
First of all, in its report, the Treasury of Navarra confirms that cryptocurrencies and other digital currencies constitute a means of payment. The financial services linked to them will be exempt from Value Added Tax. That is why the financial transactions that fall on the same are also exempt from Value Added Tax.
The purpose of the exemption is to avoid only the taxation of transactions classified as financial. These are qualified in the aforementioned article 17.1 paragraph 14. It must be taken into account that certain management, administrative or deposit services are not of a financial nature and, therefore, do not benefit from the exemption of the Tax.
Ruling for a Dex configured through a DAO
In the specific case, it is a Dex (decentralized exchange) configured through a DAO called BAMBOO DEFI. The commissions that the promoter company -according to agreement with the DAO- charges do not derive properly, points out the tax authority, from the ownership of the tokens or the operations carried out with them, but they are going to be demanded by reason of the use that the Bamboo Defi holders make of the decentralized platform. Therefore, it considers that they do not have the financial nature required by article 17.1.14 in order to apply the exemption.
The agency concludes that the service consisting of enabling the use of the exchange platform to the holders of the tokens, and therefore will be subject to and not exempt from Value Added Tax.