Hive asks EU to review Swedish VAT on bitcoin mining

Hive has asked the European Commission to review whether value-added tax should apply to the goods or services generated by its bitcoin mining rigs in Sweden.

The company and Sweden’s tax authority disagree over the proper VAT treatment. Hive operates publicly listed data centres in Sweden that run bitcoin mining equipment. Outside Sweden, the company has also completed the second phase of HIVE’s Paraguay mining expansion, increasing its total mining power to 18 EH/s.

The referral asks the EU executive to determine whether the Swedish tax authority’s assessment complies with the EU VAT Directive. The Commission may request information from both Sweden and Hive as part of its examination.

If the Commission finds Sweden’s interpretation incompatible with EU law, it can ask Sweden to change its practice or open an infringement procedure. Any formal finding or enforcement action could take several months or longer.

VAT classification affects whether miners must charge VAT on services and whether they can reclaim input VAT on costs such as electricity and equipment. A ruling against the Swedish view could allow miners to recover VAT; a ruling in Sweden’s favour could create larger VAT bills and possible retroactive liabilities.

European case law has addressed some crypto services. In 2015, the Court of Justice of the European Union ruled that exchange services converting fiat currency to bitcoin and vice versa are exempt from VAT when bitcoin functions as a means of payment. That decision covered exchange services and did not resolve how mining should be treated for VAT purposes.