The UK’s tax authority, HM Revenue and Customs (HMRC), has published guidance explaining how existing VAT rules apply to crypto-asset transactions. As there are no specific VAT rules for crypto-assets, sellers must assess their transactions based on the characteristics of the assets, the type of customer and the nature of the supply.

VAT treatment depends on the underlying asset

HMRC explains that crypto-assets can represent goods, services or tangible and intangible assets, meaning their VAT treatment may differ depending on what is being supplied.

For example, the VAT treatment of a non-fungible token (NFT) depends on the underlying asset it represents. An NFT associated with digital artwork may be…