Accounting treatment for virtual currencies

According to European Parliament and Council Directive 2018/843[1] virtual currencies are considered to be a representation of value and means of exchange and not a financial instrument. This is because virtual currencies are not issued or guaranteed by a public authority such as a central bank and are not linked to other fiat currencies.

In the 2020 review of the taxation of virtual currencies, the Organization for Economic Co-operation and Development [2] (known as the OECD) identified three reasons why virtual currencies should not be considered as official financial instruments and these reasons are as follows:

  • Lack of evidence that virtual currencies are recognized as a legal tender in at least one jurisdiction. Accordingly, virtual currencies mainly represent a value in some fiat currency.
  • The ability to pay in virtual currencies is limited compared to, for example, the euro or the US dollar.
  • According to the OECD, virtual currencies that served as a reliable store of value are significantly limited by their high volatility.

The State Revenue Service (hereinafter - SRS) in the 2019 guidelines on the application of tax and accounting treatment to transactions with virtual currency also indicates the reasons why, by the Law on the Annual Financial Statements and Consolidated Financial Statements, virtual currencies are not considered as a representation of value in accounting. These reasons are:

  • A transaction in virtual currencies is not recognized as an agreement between the parties where one party acquires financial assets and the other party incurs financial liabilities or securities;


  • Virtual currencies are not official currencies, they do not have fiat currency status (are not backed by any government) and are not regulated or issued by financial regulators or tax authorities [3].

Based on the above, the SRS recommends companies that undertake transactions with virtual currencies to account for virtual currencies assets as inventories and to indicate the value in euros. As virtual currencies are accounted for as inventories, transactions in which virtual currencies are used are to be classified as barter.

When exchanging one virtual currency for another virtual currency, if the value of these currencies changes, the difference arising on the exchange transaction shall be included in the income statement.

When preparing a company's balance sheet, it is necessary to revalue current assets.SRS indicates that at the date of the balance sheet virtual currency inventories are stated at the lower of two – either cost or market value.

[1] Directive (EU) 2018/843 of the European Parliament and of the Council (30 May 2018), OJ L 156, 19.6.2018, p. 43–74.

[2] OECD (2020), Taxing Virtual Currencies: An Overview Of Tax Treatments And Emerging Tax Policy Issues, OECD, Paris. issues.htm

[3]Guidelines of the State Revenue Service on the application of tax and accounting regulations to transactions with virtual currency