Cryptocurrencies are neither currencies nor commodities, according to Her Majesty’s Revenue and Customs
Cryptocurrency exchanges have to pay a 2% digital services tax in the U.K., according to a Sunday report by The Daily Telegraph.
They do not qualify for an exemption granted to financial marketplaces since the Her Majesty’s Revenue and Customs office doesn’t recognize cryptocurrencies as “financial instruments.”
The tax on the local revenues of large tech companies was introduced in April 2020.
CryptoUK, a crypto lobbying group, is not happy about the lack of the exemption since it would further stifle the industry.
The U.K. arm of the Coinbase exchange is expected to easily surpass the revenue threshold of £25 million ($33 million) due to the crypto trading boom in 2021.
However, HMRC is adamant that crypto assets cannot be classified as either commodities or currencies.
In October, European governments forged a deal with the U.S. to establish a new global tax regime to eschew America’s retaliatory tariffs.