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Help with VAT treatment of cryptoassets — GfC21

Published 15 October 2026

Purpose and scope of the guidelines

These guidelines are for UK and overseas businesses involved in cryptoasset transactions where UK VAT may apply. This includes businesses that sell or exchange cryptoassets and businesses that operate platforms where other people do this.

They explain what you need to consider when deciding how VAT may apply to your cryptoasset activities, including if you need to register for VAT and what VAT obligations you may have. This includes activities involving cryptocurrencies or other tokens supplied to customers or to other businesses. 

Businesses covered by these guidelines include artists and creators who supply cryptoassets directly to customers and operators of digital platforms or marketplaces where other people supply cryptoassets. In some circumstances, the platform operator may be responsible for accounting for VAT. The guidance may also be useful to advisers and agents acting on behalf of these businesses. Following these guidelines helps reduce the risk of mistakes and VAT penalties. 

These guidelines explain: 

• what HMRC means by cryptoassets
• when you need to register for VAT
• what information you need to collect about your customers and why
• the rules about the place of supply for cryptoasset transactions
• what records digital platforms and marketplaces need to keep

Background

Under the UK Value Added Tax Act 1994, the tax system splits all business transactions into two strict categories — a supply of goods or a supply of services. This division exists because the law defines a ‘supply of goods’ very specifically as transferring ownership of physical items. The law then treats a ‘supply of services’ as anything else that does not count as selling goods.

Cryptoassets (sometimes called ‘tokens’ or ‘cryptocurrencies’) are a digital representation of value that are created, stored and transferred securely using public computer networks, and cannot be altered or destroyed.

There are many different types of tokens, and they can have different uses. Some tokens can represent ownership of something or the right to access particular goods or services. The asset, goods or services represented by the token are known as the underlying asset or supply. The underlying asset can be tangible or intangible, such as digital or physical art, music and collectables.

A non-fungible token (NFT) is a unique digital certificate that represents ownership of an asset. The VAT treatment of an NFT will depend on the asset it represents. For example, if the underlying asset is a piece of digital art, then the same VAT treatment as digital art will usually apply. If the underlying asset is a physical item, such as a car, then the same VAT treatment as a car will usually apply.

There are no separate VAT rules for cryptoassets. VAT still depends on what you supply and how it is used, not the definition or description of a token. You can read more about HMRC’s view of different token types in CRYPTO10100.

Guidelines for Compliance — recommended approach 

When to register for VAT

For information about when you may need to register for UK VAT, read HMRC’s guidance on how to Register for VAT: When to register for VAT.

You may not need to register for VAT in some circumstances. Check Who should register for VAT (VAT Notice 700/1) to see if any of the following apply to you:

• all your sales to the UK are zero-rated (read section 2.4 ‘Zero-rated supplies’)
• you’re an overseas seller and all your sales to the UK are made through an online marketplace to non-business customers (read section 12 ‘Non-established taxable persons — overseas sellers’) 
• you’re a business based in an EU member state and you only make sales of goods to a ‘non-taxable’ customer in Northern Ireland (read section 6.1 ‘Distance selling — definition’) 
• all your sales to the UK are made to a VAT-registered business in Great Britain (England, Scotland and Wales) who will account for the VAT using the ‘reverse charge’ procedure (read section 9.3, ‘When you have to register’)

The reverse charge 

Normally, it is the supplier of a service who must account for any VAT due to the tax authority in the relevant jurisdiction. However, for certain services the business customer must account for any VAT due. This procedure is called the ‘reverse charge’, but it is also known as a ‘tax shift’. In some cases the supplier can apply the reverse charge to the supply of cryptoassets.

The reverse charge applies to services where:

• the place of supply is the UK 

• the supplier belongs outside the UK 

• the customer is a ‘relevant business person’ (read VATPOSS01350 — What is a ‘relevant business person’) who belongs in the UK 

• the supply is not exempt (this includes exempt supplies subject to an option to tax)

• the supplies is not within the general rule (read VATPOSS06300 — Supplies to relevant business customers), the customer is VAT registered in the UK

Where the reverse charge applies, you may not need to register for UK VAT. For more information read VATPOSS14000 — Reverse charge.

If you do not register for VAT in the UK when you’re required to, HMRC may register you without your agreement. 

You may be charged a penalty if you do not register for VAT when you should have. You can find more information about registration and the relevant time limits at Who should register for VAT — VAT Notice 700/1. 

Record keeping and customer information 

Internationally, tax authorities are significantly increasing the amount of data businesses must collect about cryptoasset transactions. Cryptoasset businesses must collect information about their customers to meet financial regulations, security requirements and prevent illegal activity. However, the need to gather and retain customer information is not a new development for VAT.

All VAT registered businesses must keep complete and up to date records so they can calculate and account for VAT correctly (read Record keeping (VAT Notice 700/21)).

You must collect and keep sufficient information to determine the correct VAT treatment of your cryptoasset transactions. You should get this information even when your customer’s details are not stored on the blockchain.

If you do not collect sufficient customer information, you may under-declare VAT. This can lead to compliance checks by HMRC, VAT adjustments and where appropriate, interest and penalties.

To ensure VAT is calculated accurately, you need to know: 

• who your customer is 

• where they are established 

• whether they are a business or an individual customer 

This is essential to work out the correct VAT treatment. If you fail to account for VAT accurately, you could be charged a penalty.

Collecting information about your customers

The place of supply of services rules determine in which jurisdiction a transaction is taxable. If you are a UK VAT-registered business supplying digital services across borders, you need to work out:

• if the customer is a business or a private customer 
• if the supply is a ’digital service’ (otherwise the general place of supply of services rules will apply) 
• the customer’s location 

If you are a UK business and the supply is not made in the UK, you’ll need to check the rules in the jurisdiction where your customer is usually located. You may have to register for VAT or its equivalent in that jurisdiction. 

Determining whether your customer is a business or a private customer 

You need to know whether you are making a:

• business-to-business (B2B) supply
• business-to-customer (B2C) supply

This is because different place of supply rules can apply depending on whether your customer is acting as a business or a private consumer.

B2B supplies mean supplies made to businesses. It also includes supplies to customers that have both business and non-business activities such as charities, local authorities and government departments. 

 B2C supplies means supplies to a: 

• private individual 

• charity, government department or other body which has no business activities 

• ‘person’ who receives a supply of services wholly for a private purpose — a ‘person’ can mean a ‘natural person’ which is a living human being, or a ‘legal person’ which is an artificial entity such as a corporation, non-profit or government agency

Your customer may give you a VAT registration number as evidence of their business status.

A customer who is in business but is not VAT registered may give you other evidence of their business status. For example, they could give you a link to their business website or commercial documents.

You can decide whether to accept this evidence.

If you accept that the customer is in business, treat the supply as B2B.

For a B2B supply of services:

• the supply does not come within the scope of business-to-consumer arrangements
• the place of supply will usually be where your customer is based

If they are:

• based in the UK, then UK VAT will be due
• outside of the UK, then no VAT is due in the UK, but you must apply the rules for the jurisdiction where they are based

If you are providing a digital service you need to consider whether the ‘Use and Enjoyment’ rules apply.

Determining if your supply is a digital service 

You need to check whether what you sell or exchange is a digital service. If it is not a digital service, the general place of supply of services rules will likely apply. 

Digital services can include:

• radio and television broadcasting services 

• telecommunications services 

• electronically supplied services (ESS) 

For further information on the definitions of digital services and ESS read VAT rules for supplies of digital services to consumers. HMRC does not give a comprehensive and definitive list of what is considered to be a digital service. Contact HMRC if you’re not sure if your supplies are digital services. 

Where the supply is an ESS, the place of supply will be:

• where the customer is located for B2C sales

• where the supplier is located for B2B sales

The place of supply of digital services 

If you supply digital services directly:

• to customers in the UK, UK VAT applies
• to customers outside the UK — UK VAT does not usually apply, but you may have VAT obligations in the jurisdiction where the customer is located

If you supply digital services to customers via a third-party platform or marketplace, the digital platform may be responsible for accounting for VAT on the supply instead of you. You should check this position with the platform or marketplace.

If your supplies are liable to UK VAT, you will need to register for VAT in the UK if you are based outside the UK.

Finding out your customer’s location

If you make B2C supplies of digital services to customers in other jurisdictions, you must collect 2 pieces of evidence showing where the customer normally lives. You need this evidence to show where the supply takes place for VAT purposes.

Presumptions may simplify this for certain digital services. For more information, read the section on customer location evidence in VAT rules for supplies of digital services to customers.

If you cannot make a presumption, you must collect clear evidence of your customer’s location.

Example 1 — collecting customer information

Marie is a UK-based digital artist who runs a business where she:

• creates and sells NFTs through her own website
• charges her customers in Ethereum (ETH)

The blockchain transaction records the wallet addresses and payment amount but does not show:

• where the customer normally lives
• whether the customer is a business or consumer

Marie’s sales increase and she becomes liable to register for UK VAT. She initially considers charging UK VAT on every sale, but this would not:

• correctly identify which supplies are subject to UK VAT
• address any VAT obligations she may have in other jurisdictions

Marie updates her website so that customers must create an account before making a purchase. As part of the checkout process, she:

• collects evidence of the customer’s location
• asks whether the customer is buying as a business or consumer
• records the sterling value of the sale

This allows her to determine if UK VAT is due and if she needs to consider VAT or equivalent taxes in other jurisdictions. 

Digital portals, platforms, gateways and marketplaces 

Where cryptoassets are supplied through an online platform, you must identify if the supply is made to the customer by the supplier or by the platform operator. For more information, read digital portals, platforms, gateways and marketplaces.

If you operate a digital platform that third-parties supply cryptoassets through, you are liable to account for the VAT on those sales unless you meet all the following conditions:

• digital platforms and everyone else involved in the supply must identify who the supplier is in their contractual arrangements
• invoices, bills or sales receipts must identify that supplier and the service supplied

• digital platforms must not:

  • authorise the charge to the consumer
  • authorise the delivery
  • set the general terms and conditions of the sale

If you do not meet all these conditions:

• you must treat the sales of third-party e-services as if they were your own
• you must declare any VAT that is due
• the responsibility for accounting for any VAT moves back to the person who supplied you if you’re giving intermediary services to that person

 Example 2 — the platform must account for VAT 

A digital artist creates a series of images, each with its own NFT for proof of ownership, and lists the token on a digital art platform under a pseudonym. To purchase an image, customers must:

• create a user account on the platform
• agree to the terms and conditions set out by the platform
• provide their address and phone number

Customers buy the NFTs online for a fixed price. When they complete the purchase, the proof of ownership is transferred to their wallet. The smart contract used for the purchase automatically sends payment directly to the artist and sends the sales commission directly to the platform. This is an ESS.

In this case, the platform is responsible for collecting and paying VAT, as they have set the terms for the sale. The platform must ensure they have customer details so they can correctly identify the place of supply.

Example 3 — the artist must account for VAT 

A digital artist creates a series of images, each with its own NFT. The NFTs are listed for sale on a digital art platform, for purchase as a digital download through a smart contract. To purchase an image, the buyer pays the artist directly and is not required to have a user account on the platform.

The NFT is listed for a fixed price, and the customer completes the purchase online by using a payment service provider link outside of the platform. This payment link requires the customer to provide details of their address and telephone number. This allows the payment service provider to determine the location of the customer and share this information with the seller. The seller can validate this location data by checking it against the customer’s IP address.

Once the customer pays, the smart contract transfers the NFT to their wallet. This is an ESS. 

In this case, the seller is responsible for collecting and paying VAT. The platform has no access to customer details, does not set the terms and conditions for the sale, and does not authorise the charge to the customer or delivery of the item for sale. The invoice is supplied by the seller and identifies the artist as the seller.

If you’re not sure who must account for VAT

Because of these conditions most digital platforms will be liable to account for the VAT on the third-party sales. If you are unsure about your responsibility, read HMRC’s guidance about non-statutory clearances. 

If you provide payment services

If your only role in the supply is to provide for the processing of payments, you are not regarded as a digital platform and you do not have to account for the VAT on the sale of the ESS or digital service. However, you may be required to assist with identifying the location of the customer, for example by providing the 2-digit country code of the consumer’s country of residence as listed in their records. For more information on businesses using payment service providers, read VAT rules for supplies of digital services to consumers.

Next steps — further questions, feedback, legislation and guidance

If you have made a mistake

If these guidelines show that you made an error in a VAT return, read how to correct VAT errors and make adjustments or claims (VAT Notice 700/45). Enter ‘GfC21’ in the ‘reason for error’ box when you correct your return. 

You may have to pay interest and penalties if you do not meet your VAT obligations.

If you think you may have failed to meet your obligations, read the HMRC compliance checks factsheets on penalties to find out about: 

• penalties HMRC could use 

• when these penalties may apply 

Further questions

If you have any further questions after reading these Guidelines for Compliance email:ccgguidelinesforcompliance@hmrc.gov.uk. Include the Guidelines for Compliance reference number ‘GfC21’ in the subject line. If you have a Customer Compliance Manager (CCM) you should copy them into the email. 

Sending information by email carries certain risks. HMRC will assume that by sending information by email you understand and accept these risks. 

Further support

If you are not sure of the correct VAT position, you can use HMRC’s Non-Statutory Clearance Service to ask for advice.

Before applying, you must have considered

• these guidelines
• the relevant legislation
• HMRC guidance
• VAT notices

You should only apply if you are uncertain how the law applies to your specific circumstances. 

If these guidelines lead you to apply for a non-statutory clearance, include the reference ‘VAT Cryptoassets GfC21’ when you contact HMRC.

Give feedback about these guidelines 

We are interested in other areas of complexity for businesses operating in this sector. If you have examples that could be included in future guidelines, contact us by email:ccgguidelinesforcompliance@hmrc.gov.uk.

Legislation and guidance

The most relevant legislation in the VAT Act 1994 is: 

VATA 1994 – Section 4: Scope of VAT 

VATA 1994 – Section 5: Meaning of supply

VATA 1994 – Section 7A: Place of supply of services

VATA 1994 – Section 9: Where a person belongs

VATA 1994 – Schedule 4A: Place of supply of services (ESS rules)

The main sources of available guidance include: 

Cryptoassets Manual – CRYPTO10100

VAT Notice 741A – Place of supply of services

VAT rules for digital services to consumers