The Contents of Highlights & Insights on European Taxation, Issue 5, 2026

Please find below a selection of articles published this month (May 2026) in Highlights & Insights on European Taxation, plus one freely accessible article.

Highlights & Insights on European Taxation (H&I) is a publication by Wolters Kluwer Nederland BV.

The journal offers extensive information on all recent developments in European Taxation in the area of direct taxation and state aid, VAT, customs and excises, and environmental taxes.

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Year 2026, no. 5      

TABLE OF CONTENTS 

INDIRECT TAXATION, CASE LAW

– Žaidimų valiuta (C-472/24). Virtual game currency is neither a VAT-exempt financial transaction nor a voucher. Court of Justice

(comments by Philippe Gamito) (H&I 2026/145)

– Oblastni nemocnice Kolin (C-513/24). Limits on VAT deductibility for statutorily required healthcare costs. Court of Justice

(comments by Krzysztof Lasiński-Sulecki) (H&I 2026/144)

– Credidam (T-643/24). Unlicensed public use of protected works constitutes a taxable supply of services. General Court

(comments by Giorgio Beretta) (H&I 2026/134)

– Lyko Operations (C-436/24). Loyalty programme points do not constitute as vouchers under VAT Directive. Court of Justice

(comments by Jeroen Bijl) (H&I 2026/125)

CUSTOMS AND EXCISE

– Swedish Match (Regime de justification simplifiee) (C-322/25). Free movement and excise duties. Limits on automatic justification of tax marking destruction. Court of Justice

(comments by Giorgio Emanuele Degani) (H&I2026/143)

– Scrap-Transporteur (T-194/25). Clarifying the scope of ‘smoking tobacco’ under EU excise law. General Court

(comments by Giorgio Emanuele Degani) (H&I 2026/127)

MISCELLANEOUS

– Kotaňak (C-748/24). Presumption of innocence and appellate review. Limits on judicial assessment of evidence. Court of Justice

(comments by Edwin Thomas) (H&I 2026/137)

FREE ARTICLE

– Žaidimų valiuta (C-472/24). Virtual game currency is neither a VAT-exempt financial transaction nor a voucher. Court of Justice

(comments by Philippe Gamito) (H&I 2026/145)

Analysis

The outcome of the case is, at first sight, unsurprising. The applicant arguably overstretched both the financial services exemption and the voucher regime by attempting to fit a piece of ‘play money’ into a video game within their scope. However, the judgment leaves three important issues open, which deserve closer examination.

The contraction of the Hedqvist extension

The Court of Justice of the European Union (hereinafter: ‘CJ’)’s reasoning effectively places a clear limit on the Hedqvist (CJ 22 October 2015, C‑264/14 Skatteverket v David Hedqvist, ECLI:EU:C:2015:718) extension. While in 2015, the Court had extended Article 135(1)(e) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive (EU) 2016/1065 of 27 June 2016 (hereinafter: ‘VAT Directive’) to non-traditional currencies that are ‘accepted by the parties to a transaction as an alternative to legal tender’ and ‘have no purpose other than to be a means of payment’, the present judgment confirms that this extension is constrained by a real-world test: the asset must operate as a means of payment outside the closed ecosystem in which it was created and be ‘in order to obtain real goods or services’ (Žaidimų valiuta, C‑472/24, paragraph 28). ‘Play money’ – to use the AG’s evocative term – does not qualify.

That apparent clarity, however, is not without its challenges. The Hedqvist test – that a non-traditional currency qualifies only if it has ‘no purpose other than to be a means of payment’ – is itself difficult to reconcile with the empirical reality of the very asset it was designed to accommodate. Bitcoin is, in practice, far more often held as a speculative investment or store of value than spent as a means of payment, and that has been increasingly true since the judgment in Hedqvist (C‑264/14). If that test were applied to Bitcoin today as literally as the CJ applied it to in-game Gold, Bitcoin might arguably fail it: most holders do not use it to acquire goods or services, and its dominant economic function is closer to that of an investment asset than a payment instrument. The Advocate General (hereinafter: ‘AG’) appears to have been aware of this difficulty. At paragraph 38 of her Opinion (Opinion of Advocate General Kokott 11 September 2025, C‑472/24 Žaidimų valiuta, ECLI:EU:C:2025:699), she carefully anchors the Hedqvist extension to the binding factual finding in that case that Bitcoin was: ‘used in Sweden, principally, for payments made between private individuals via the internet’; at paragraph 40, she limits the extension to non-traditional currencies: ‘accepted (…) as a contractual direct means of payment between operators’. The CJ, by contrast, applies the Hedqvist formula at face value.

In my view, the ‘unspoken’ distinction between Bitcoin and in-game Gold is not really the asset's exclusive payment function, but the breadth of the ecosystem in which it operates. Bitcoin functions in an open, cross-border ecosystem in which unrelated merchants and unrelated peers can (and at least some do) accept it; in-game Gold functions only within a single proprietary platform operated by one game operator. The CJ's own language at paragraph 28 hints at this when it refers to acceptance: ‘outside that game (…) in order to obtain real goods or services’, but the underlying principle of ecosystem openness is never articulated. That silence is unfortunate, because openness is precisely the criterion that should assist in determining the VAT implications of hybrid digital assets: operator-cashable in-game currencies, utility tokens with active secondary markets, and stablecoins that sit at the intersection between payment tokens and asset tokens (on the difficulties of classifying these hybrid categories, see M.S. Screpante, ‘VAT Challenges in the Age of Blockchain: Crypto and NFTs Treatment in the European Union and Beyond’, International VAT Monitor, November/December 2025, pp. 234-236). Practitioners – and national tax authorities alike – would benefit considerably from the CJ articulating the Hedqvist test again in those terms, rather than continuing to apply a ‘means of payment’ formula.

The CJ’s judgment in Žaidimų valiuta (C‑472/24) must also be read alongside a German Federal Tax Court’s decision in the Second Life case (BFH V R 38/19, 18 November 2021), which addresses a related but distinct question (see B. Elliott, ‘Evolving technologies: VAT, crypto-assets and the metaverse’, Tax Journal, 22 July 2022). The Second Life case concerned whether intra-game activity (renting virtual land for ‘Linden Dollars’) constituted an economic activity at all; the Federal Tax Court held that ‘pure game advantages’ which confer no real-world economic advantage do not amount to consumption for VAT purposes and that intra-game transactions, therefore, fall outside the scope of VAT, although the subsequent exchange of Linden Dollars for fiat currency did constitute a real economic activity (Elliott, op. cit.). The two judgments are conceptually consistent: both refuse to treat the in-game economy as part of the real world, but each draws the consequence from a different doctrinal angle.

The comparison between Žaidimų valiuta (C‑472/24) and the Second Life decision also exposes a broader difficulty: VAT outcomes in this area risk turning on formal classifications even where the instruments concerned are functionally or economically similar. In other words, instruments that perform broadly comparable economic functions may be treated differently simply because they are placed in different boxes – as a means of payment, a voucher, an electronic service, or merely an in-game asset. The challenge with that approach is that it sits uneasily with the principle of fiscal neutrality, under which economically equivalent transactions should not, in principle, bear different VAT consequences without sufficient justification. The same concern has been raised elsewhere in relation to economically equivalent payment instruments (see P. Gamito, ‘Is an instruction to make a payment VAT an exempt supply for VAT purposes?’, 27 EC Tax Review 4 (2018), p. 223), and it arises again in the context of ZV. Further references may therefore be needed to clarify the precise boundary of the Hedqvist extension (or limitation) and, in particular, what it means in practice for a digital asset to be ‘accepted outside [the platform] as a means of payment’ (see also K. Tourmous & A. Soldai, ‘Belgian VAT Exemption for Transactions on Cryptocurrencies: Scope of Application and Boundaries’, International VAT Monitor, November/December 2024, pp. 285-287).

The ‘consumable benefit’ characterisation and the limits of the voucher regime

The voucher analysis is the more technically interesting part of the judgment. The CJ adopts the AG’s point that in-game Gold is ‘itself the consumable benefit’ and therefore cannot serve, like a voucher, to procure a subsequent consumable benefit (AG Opinion in Žaidimų valiuta, C‑472/24, paragraph 32). On that basis, the obligation to accept the condition in Article 30a(1) of the VAT Directive is not satisfied.

Whilst the conclusion is sensible as a matter of fact (the applicant was buying and reselling Gold rather than redeeming it for further services), the reasoning glosses over a real conceptual difficulty. Within the game, players use Gold to acquire, for example, a ‘magic sword’ or another in-game functionality, which itself – from a VAT perspective – is a separate electronic service. The Gold, therefore, very much resembles an instrument with which a future, as yet unspecified, in-game service is procured. The CJ’s answer is that the in-game item (a sword, a spell, an avatar enhancement) is not really a ‘separate service’ because the entire in-game economy is bundled as one ongoing electronic service supplied by the game operator. Whether that broad-brush reasoning withstands scrutiny in more complex factual circumstances remains to be seen – particularly for platforms with marketplaces in which in-game currency is used to purchase distinct items from multiple suppliers, or for in-app purchases of named items priced in the in-game currency. The point is not merely theoretical: as Screpante notes, the line between utility tokens (which function ‘as prepaid instruments inside a certain ecosystem’ and are typically analysed under the voucher regime) and pure consumable services is precisely where most digital-asset VAT classifications now turn to (Screpante, op. cit., p. 234).

There is also an unexplored aspect of paragraph 28 of the judgment: the CJ appears to attach weight to the game’s conditions of use, noting that players do not own Gold. That point is presented as supporting the conclusion that Gold is not a means of payment. Yet this sits uneasily with VAT’s general indifference to the property law characterisation of consideration. From a VAT perspective, the central question is whether there is a supply for consideration; whether ‘Gold’ legally belongs to players does not seem obviously relevant. By relying on contractual restrictions on ownership, the CJ may also have introduced a criterion that game operators can influence through their drafting of terms of use. That is unlikely to provide a satisfactory long-term basis for the VAT classification of digital assets. More broadly, this aligns with the view that the legal characterisation of digital tokens should depend on the rights actually conferred on the holder, rather than on labels or technological terminology. As H. Liu notes, the key is to identify the legal rights attached to a token rather than to make assumptions about what the token represents (H. Liu, ‘Digital assets: the mystery of the ‘link’’, Butterworths Journal of International Banking and Financial Law, March 2022, p. 161).

A missed opportunity on the margin scheme?

The most striking feature of the judgment is what it does not decide. The AG dedicated a substantial part of her Opinion (AG Opinion in Žaidimų valiuta, C‑472/24, paragraphs 50 to 77) to exploring whether the margin scheme in Articles 311 et seq. of the VAT Directive could be applied mutatis mutandis to non-tangible items traded on a secondary market in the same way as traditional second-hand goods. This is not a tangential issue: the AG explicitly recognised that the wording of the directive creates a competitive distortion in markets where professional traders buy from non-taxable persons (AG Opinion in Žaidimų valiuta, C‑472/24, paragraphs 49 to 51), and that such markets have now proliferated through online platforms (resold concert tickets, NFTs, in-game items, and more).

The AG’s analysis was, in essence, that in 1988, the legislature could not have foreseen a digital secondary market for non-tangible objects; that there is no ‘legally permissible objective’ nor any ‘plausible reason’ for restricting the margin scheme to tangible goods (AG Opinion in Žaidimų valiuta, C‑472/24, paragraph 75); and that the principle of equal treatment under Article 20 of the Charter of Fundamental Rights of the European Union (CFREU) therefore supports a broader teleological interpretation. The AG did, however, set a sensible limit: the comparability with the second-hand goods market requires that the items being resold typically contain residual, non-deductible VAT (AG Opinion in Žaidimų valiuta, C‑472/24, paragraph 76). The AG’s reasoning draws explicit support from German doctrine on the principle of equal treatment in VAT and on the margin scheme (Wäger, ‘Neues aus Europa: Der Gleichbehandlungsgrundsatz und seine Bedeutung für die MwStSystRL’, Deutsches Steuerrecht 2017, p. 2020 et seq.; Stadie in Rau/Dürrwächter, Kommentar zum UStG, as cited in footnote 39 of the AG Opinion). The AG’s proposal addressed a real economic distortion, yet the Court did not engage with this aspect of the Opinion.

By passing over this analysis entirely, the CJ has implicitly preferred legal certainty over substantive neutrality – perhaps understandably. The wording of Article 311(1)(1) of the VAT Directive refers expressly to ‘movable tangible property’, and a teleological extension would have rewritten the provision rather than interpreted it. Nevertheless, the consequence of this judicial restraint is significant. As the AG candidly observed, professional traders in items such as in-game Gold may now find themselves unable to compete on equal terms with non-taxable private sellers (AG Opinion in Žaidimų valiuta, C‑472/24, paragraph 49). Their realistic option is to operate as intermediaries (with VAT charged only on the commission fee), which may or may not meet the small business threshold and fundamentally changes the economics of the activity. The practical consequences for platforms and traders extend beyond the case at hand: those potentially affected must map and classify transactions, confirm customer status, and reassess marketplace VAT liability.

More broadly, the judgment underlines a regulatory gap. The EU VAT Committee has been considering crypto and digital assets for several years (see Screpante, op. cit., p. 234). The issue is now squarely on the policy agenda, particularly with the increasing convergence between crypto-assets, in-game economies, and the metaverse. As Elliott observes, digital assets should not necessarily be seen as a unitary category of assets but rather, they are a series of types of assets which fall to be analysed by reference to their unique characteristics (Elliott, op. cit.); (although I slightly disagree to this statement and prefer to differentiate digital assets based on their trading environment), the Court was right to be cautious about effectively legislating a new margin scheme for services. However, the Commission should now take up the AG’s implicit invitation and consider whether the VAT Directive should be amended to extend the special arrangements in Articles 311 et seq. of the VAT Directive (or an analogous regime) to professional dealers operating in secondary markets of non-tangible items typically purchased from non-taxable persons. Without such reform, the existing rules will continue to push activity in these markets into the grey zone of intermediation, peer-to-peer transactions, or non-EU platforms.

Conclusion

The CJ’s decision in Žaidimų valiuta (C‑472/24) is somewhat orthodox: in-game currency is neither legal tender nor a Hedqvist-type means of payment, and it is not a voucher within the meaning of Article 30a of the VAT Directive. VAT is therefore due on the full consideration received for the sale of in-game Gold, in accordance with the general rule in Article 73 of the VAT Directive.

Yet the judgment is unsatisfactory in two respects. First, the reasoning lacks the depth needed to provide clear guidance for cases involving hybrid digital assets, where the line between ‘play money’ and ‘accepted alternative to legal tender’ will be increasingly fact-sensitive. Second, and more importantly, the Court declined to engage with the AG’s thoughtful proposal to extend the margin scheme to ‘second-hand’ services, leaving in place a structural distortion in markets. The decision, therefore, is likely to be more interesting for what it signals than for what it actually settles: a regulatory reform of the VAT Directive on these issues is overdue.

Philippe Gamito