Broad burden of proof for VAT deduction in crypto currency trade

Recently, the Supreme Court ruled that preliminary questions from the court about the deduction of input tax on activities relating to bitcoins do not lend themselves to being answered.

The case in question concerns an entrepreneur who performs mining activities and makes computer calculation power available for that purpose. When mining bitcoins, an attempt is made to realise a block within a bitcoin blockchain. For the mining of bitcoins, the entrepreneur has purchased computer and cooling equipment and pays the electricity required for this. He deducts most of the VAT on these costs. However, according to the Tax Authorities, deduction is not possible.

In principle, only the VAT related to VAT taxed services can be deducted. Mining bitcoins is a VAT-exempt service, as a result of which, in principle, a VAT deduction is not possible. However, if the purchasers of these exempt transactions are located outside the European Union (EU), there is still a right to deduct.

The entrepreneur must demonstrate the extent to which his customers are located outside the EU. In the case in question, the inspector states that the entrepreneur has insufficiently proven the right to deduct. The entrepreneur argues that it is not reasonably possible to provide concrete evidence for this and therefore relied on general statistical data. These data state that 98 percent of the trade in bitcoins takes place outside the EU, as a result of which the interested party would be able to deduct 98 percent of the VAT charged.

Because the court thinks that a problem of proof arises, it submits the following preliminary questions to the Supreme Court:

  1. May the rules on evidence that input VAT be deducted if the purchasers are established outside the EU be interpreted so broadly that, in the event of a serious and real need for proof, it may be established by presumption or general statistical data that the recipient of a service is established outside the EU?; and
  2. If that question is answered in the affirmative: may general statistical data on trade in bitcoins be used to substantiate the place of establishment of the recipients of mining activities, when trade in bitcoins is not the same as mining activities carried out by the claimant?

The Supreme Court is of the opinion that the provision referred to in the first question is not important, because this provision does not contain rules of evidence.

Because European provisions do not contain rules of evidence, the Supreme Court is of the opinion that it is up to the Member State to establish rules of evidence. However, the Dutch rules also do not contain rules on evidence to establish whether the customers are located outside the EU. According to the Supreme Court, an entrepreneur can therefore use anything available to him as evidence.

In the case of crypto trade, it is not possible to unequivocally establish whether the buyer is resident outside the EU. However, we see possibilities to make it plausible in a practical way what percentage lives outside the EU, so that you can deduct the VAT for that percentage.


For more information, please contact:

HVK Stevens Logo

HVK Stevens professionals have legal, tax and financial knowledge and experience

HVK Stevens logo


HVK Stevens
Prins Bernhardplein 200
1097 JB Amsterdam
+31 (0)20 76 30 900


HVK Stevens Rotterdam
Westerkade 2B
3016 CL Rotterdam
+31 (0)10 476 88 33


HVK Stevens
4, Avenue Jean-Pierre Pescatore,
L-2324 Luxemburg,
Grand Duchy of Luxembourg


Lagun Family Services B.V.
11 Johan van Walbeeckplein


HVK Stevens
Aldgate Tower
2 Leman Street, E1 8FA