Unlike cryptocurrencies, NFT liable to 15% Goods and Services Tax
New Zealand’s Inland Revenue has confirmed that trading of Non-Fungible Tokens are liable to GST. This compares to other crypto assets like digital currencies (e.g. Bitcoin) which are exempted.
The difference in the treatment is because NFT’s are unique, and not interchangeable (hence ‘non-fungible’). Whereas cryptocurrencies are fully interchangeable as a payments method. This means their trading is considered a GST exempt financial service.
Sales of NFTs to non-residents would still be free of GST. This raises questions as to how one would determine that a buyer of an NFT is non-resident – potentially very difficult when many blockchain transactions take place without the parties being able to identify each other.
The EU VAT Committee is reviewing VAT on cryptocurrency payment tokens. At the member state level, confirmation on Belgium Non-Fungible Token VAT and Spain VAT NFT has already been issued.
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What are Non-Fungible Tokens?
A non-fungible token (NFT) is a record on a blockchain which is associated with a particular digital or physical asset. The ownership of an NFT is recorded in the blockchain, and can be transferred by the owner, allowing NFTs to be sold and traded.
