Virtual currencies can be exchanged tax-free in the European Union, following a ruling from the highest court in Europe. Bitcoin and its alternatives can now be treated in the same way as traditional money, according to the European Court of Justice. It said in a statement Thursday morning that bitcoin transactions "are exempt from VAT (value-added tax) under the provision concerning transactions relating to currency, bank notes and coins used as legal tender." The ruling comes after a dispute in a Swedish court when David Hedqvist, a Swedish national, applied for permission to operate his online bitcoin exchange. The Swedish Revenue Law Commission initially told Hedqvist that bitcoin was exempt from VAT but the Swedish Tax Authority appealed against that decision.

The ruling paves the way for potentially cheaper transactions within the EU and therefore a boon for the nascent industry. The announcement came as the regulator ordered bitcoin options trading platform Coinflip, and its CEO Francisco Riordan, to cease trading due to it not registering and complying with its regulations. It added that it had also filed, and simultaneously settled, charges against the San Francisco-based firm.