VAT, GST and sales tax when customers pay in crypto
Exchanging crypto for money is generally exempt from VAT, but goods and services paid for in crypto are taxed as usual, valued at the time of sale.
If you invoice customers and accept crypto, the indirect tax on the sale usually works exactly as if you were paid in cash. The work is in valuation: you need a local-currency value at the right moment, a record of the rate you used, and a clean split between the tax on the sale and any later gain or loss on the tokens you hold.
Two different questions
Indirect tax raises two separate questions. First, is the exchange of the crypto itself a taxable supply? Second, when crypto is used to pay for something else, how is the underlying sale taxed? Across the regimes below, the answers are broadly consistent: exchanging common cryptocurrencies is generally exempt or outside the tax, and the goods or services bought with them are taxed normally.
EU: the Hedqvist ruling
In Skatteverket v David Hedqvist (C-264/14), judgment of 22 October 2015, the Court of Justice looked at a business that exchanged traditional currency for bitcoin and back, earning the spread between its buy and sell prices [1]. The Court held that this is a supply of services for consideration under Article 2(1)(c) of the VAT Directive, but that it is exempt from VAT under Article 135(1)(e), the exemption for transactions concerning currency and legal tender [1]. It also held that the exemptions in Article 135(1)(d) and (f) do not apply [1].
The ruling dealt with a bitcoin exchange service. It did not decide every token type, and member states may take different views on tokens that look more like securities, vouchers or rights to goods. Treat Hedqvist as settled for plain exchange services in bitcoin-like currencies, and take local advice for anything else.
UK: HMRC's position
HMRC's Cryptoassets Manual says VAT is due in the normal way on goods or services sold in exchange for exchange tokens, and the taxable value is the sterling value of the tokens at the point the transaction takes place [2]. No VAT is due on the supply of the tokens themselves in that exchange [2]. Exchanging bitcoin for money and back is exempt, following Hedqvist, and HMRC says mining income is generally outside the scope of VAT because there is no customer and no sufficient link to consideration [2].
HMRC describes these treatments as provisional, pending further regulatory and VAT developments [2]. The page was last updated on 28 November 2025 [2]. As of October 2026, that remains the published position.
Australia: GST
For GST, the ATO treats receiving digital currency as payment for a taxable supply the same as receiving money [4]. The GST on your activity statement must be in Australian dollars, and your tax invoice must show the GST in dollars or give enough information to work it out [4]. You use the exchange rate on your conversion day, which for non-cash accounting is the earlier of receiving payment and the invoice or transaction date [4]. Trading digital currency itself is a different matter from using it as payment [4].
The definition matters. The ATO says bitcoin and ether are examples of digital currency for GST, but a stablecoin pegged to another asset is not; its supply is an input-taxed financial supply unless GST-free [3]. NFTs are not digital currency, and their supply is taxable unless GST-free [3].
United States: state sales tax
US sales tax is set state by state, so check each state where you have a filing obligation. Two published examples point the same way. New Jersey treats convertible virtual currency as intangible property, so buying it for investment is not subject to sales tax, but a seller that accepts it for taxable goods or services must charge sales tax based on its US dollar fair market value on the date of payment [5]. New Jersey also expects the seller to record the dollar value accepted and the tax collected for each transaction [5].
Washington's Department of Revenue, in an interim statement, says that if bitcoin is converted to dollars at the point of sale, tax is computed on the converted amount; if it is held, the measure is its dollar value on the date of sale using a reliable pricing index [6]. It asks sellers to keep a dated record of the transfer, the dollar value, and the sales invoice, and it does not accept bitcoin for tax payments [6].
| Account | Debit | Credit |
|---|---|---|
| UK company sells services for 1,000 plus VAT, paid in ETH ETH received worth 1,200.00 in sterling at the time of the sale; 20% VAT rate assumed | ||
| Digital assets — ETH | 1,200.00 | |
| Revenue — services | 1,000.00 | |
| VAT payable | 200.00 | |
| ETH sold a week later for 1,150.00 VAT owed does not change; the 50.00 drop is a loss on the asset | ||
| Cash | 1,150.00 | |
| Realized loss on digital assets | 50.00 | |
| Digital assets — ETH | 1,200.00 | |
Common gaps
- Using the end-of-day or month-end rate instead of the rate at the time of sale.
- Invoices that show only a token amount, with no local-currency value or rate.
- Netting price movement on the tokens against VAT or sales tax payable.
- Treating a stablecoin as money for GST when the ATO treats it differently from digital currency.
- Assuming one state's sales tax guidance applies everywhere.
What to do
- Price every crypto-paid invoice in local currency at the time of sale and keep the rate and its source.
- Show the tax in local currency on the invoice.
- Book later price changes on the tokens separately as gains or losses.
- Map which token types you accept against each regime's definitions.
- Confirm treatment with an indirect tax adviser in each jurisdiction where you are registered.
This is general information, not tax advice.
Sources
- Judgment of the Court (Fifth Chamber) of 22 October 2015, Skatteverket v David Hedqvist, Case C-264/14 (EUR-Lex / Court of Justice of the European Union)
- CRYPTO45000 - Cryptoassets for businesses: Value Added Tax (VAT) (HMRC)
- GST and digital currency (Australian Taxation Office)
- GST and digital currency as payment (Australian Taxation Office)
- Convertible Virtual Currency, TAM-2015-1(R) (New Jersey Division of Taxation)
- Interim Statement Regarding Bitcoin: Payments, Mining, and Investment Income (Washington Department of Revenue)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.