Taking payments in bitcoin might be incompatible with new European laws, says a tax lawyer.

Under the new VAT laws that were adopted by the European Union in 2013 and came into force on January 1st, 2015, e-commerce companies located in the EU are obliged to collect two independent pieces of evidence proving the country of residence of their customers. Possible options for collecting this information include “the location of the bank account used for payment or the billing address of the customer held by that bank”.

The aim of the measure is to prevent tax evasion: large corporations have long tended to establish offices in a country with small VAT in order to pay less tax. However, the anonymous character of bitcoin might mean it does not comply with new regulations. Speaking to Coindesk, Richard Croker, head of corporate tax in a London law firm, stated:

“Due to the inability to identify a buyer or his location, taking payments in bitcoin might be partially incompatible with these new laws... It's certainly a disincentive for companies to accept bitcoin.”

However, not all lawyers agree with this opinion. Others point out that there are ways to establish the country of residence without revealing the buyer’s identity. And, according to Vanessa Mock of the European Commission,

“After a customers’ country of residence has been established, using a potentially anonymous method of payment like bitcoin shouldn't pose a problem”.  

Ultimately, everything will depend on the ways of identification chosen by the vendor.