This price surge seems to be led by the Western exchanges, and must be due to the European VAT ruling.

Were there any countries where bitcoin trades were already paying VAT (or inhibited because of it)? In Sweden maybe? In the UK?

The broad classification of these “digital services” means that the supply of bitcoins could be included in such a definition. Article 7.2.a of the explanatory notes defines digital goods so broadly as “the supply of digitized products generally, including software and changes to or upgrades of software.”

Without any European wide agreement about what digital currencies actually are for tax purposes, companies aiming to stay on the right side of the law may fairly presume that supplying digital currencies and services related to them constitute this tax liability.

The lack of the European wide ruling on the nature of bitcoins and other digital currencies for taxation is one of the biggest stumbling blocks currently facing member states as they try integrating the new form of income, saving, and spending into their domestic tax systems, where VAT levels are set. As mentioned earlier, both Sweden and Finland have fought with the EU over this issue in the past.