Value-Added Tax (VAT)
A consumption tax applied incrementally at each stage of production or distribution, ultimately borne by the final consumer -- generally distinct from capital gains tax on crypto.
Value-Added Tax (VAT) is a consumption tax applied incrementally at each stage of a good or service's production or distribution, with businesses generally able to reclaim the VAT they paid on inputs, so the tax is ultimately borne by the final consumer.
Many jurisdictions that use VAT have specifically clarified that simply buying, selling, or exchanging cryptocurrency as an investment is not itself subject to VAT, treating crypto disposals under their capital-gains framework instead — though VAT can still apply to crypto-related goods or services. Check the relevant country-specific guide in Kaavon's crypto tax section for how this is actually treated in a given jurisdiction.
Examples
- Many jurisdictions have specifically exempted crypto-to-fiat and crypto-to-crypto exchanges from VAT, treating them under capital-gains rules instead.
- VAT and capital gains tax are structurally different taxes targeting different things — consumption versus investment gains — and can both apply to different aspects of the same crypto activity.