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April 10, 2024

French Tax Authorities conclude general VAT rules apply to NFTs

French Tax Authorities recently published a ruling on the value-added tax (VAT) treatment applicable to non-fungible tokens (NFTs), concluding that NFTs are not subject to any specific VAT scheme and that general VAT rules apply.

Where an NFT is used as a certificate of ownership for tangible or intangible property, a transaction involving the transfer of the NFT does not relate to the token itself, but to the good or service it represents. Therefore, it is necessary to examine each situation on a case-by-case basis and apply the ordinary VAT rules that would have been implemented if the goods or services had been delivered or supplied without the use of an NFT.

The tax ruling also details the VAT treatment of three specific transactions carried out using NFTs: (1) creation and sale of digital collectible cards associated with NFTs; (2) creation and sale of digital graphic works associated with NFTs; and (3) financing of a video game in the process of being created through the issuance of NFTs.

For additional information on NFTs and VAT, see EY Global Tax Alert: EU VAT Committee publishes working paper on non-fungible tokens, dated 4 April 2023.

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Ernst & Young Société d'Avocats, Indirect Tax, Paris

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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