A VAT/GST perspective on crowdfunding

Abstract

Crowdfunding is not a new phenomenon. It has become increasingly relevant and has advanced to a position of representing competition to traditional financing structures. While at the outset social, altruistic notions and sponsoring were the most relevant drivers of crowdfunding, equity and debt models seem to be the broader future of this phenomenon. The thriving popularity of crowdfunding leads to questions on the tax treatment of crowdfunding. While some authors have dealt with specific issues for direct tax purposes, this chapter will attempt an analysis for VAT/GST purposes and a comparative law examination of the treatment of crowdfunding under different VAT/GST systems. Only a few jurisdictions have given guidance on the VAT/GST treatment of crowdfunding, such as amongst others Australia. On the level of the European Union, the European Commission has referred crowdfunding to the VAT Committee which consists of all Member States. On the basis of a common analysis of the transactions underlying crowdfunding, an overview of VAT/GST issues will be given.