Tax guidelines in relation to Distributed Ledger Technology (DLT) published by the Commissioner for Revenue


02 Nov 2018

The Commissioner for Revenue published a set of guidelines on 1st November 2018 relating to the treatment of Distributed Ledger (DLT) assets for the purpose of Income Tax, VAT and, Duty on Documents and Transfers.

Key features of the guidelines

The tax implications of transactions or payments involving  DLT assets would depend on whether such DLT is

  • a Coin (treated as a medium of payment and constitute the cryptographic  equivalent of fiat currencies);
  • Financial token (treated as securities/shares where they grant rights to dividends in a similar manner) or
  • Utility token (i.e. a token whose value or application is solely restricted to the acquisitions of goods or services).

A. Income tax

Transactions that involve DLT assets must be accounted a per the general rules under the Income Tax Act and their values will be determined by reference to the market value of the DLT in question.


The profits realized from the business of exchanging Coins are treated like the profits derived from the business of exchange of fiat currency. However, transactions in Coins of a capital nature fall outside the scope of tax on capital gains.

Financial tokens

Return derived by owners of Financial tokens on their holdings (e.g. dividends, interest…) in a cryptocurrency or in another currency or in kind is treated as income for Income Tax purposes.

Transfers of Financial tokens and Utility tokens

When these are made in the course of business, they will be taxed as trading transactions and the profits will be subject to income tax under the general rules of the Income Tax Act. If the transfer of financial tokens is not a trading transaction, it must be determined whether such tokens meet the criteria of ‘securities’ in terms of the Income Tax Act, and – if so – they would be subject to tax on capital gains.


An ICO of Financial tokens typically involve raising capital and so the proceeds of such ICO will not be treated as income. On the other hand, in the case of ICO’s that issue Utility tokens would be subject to tax on the gains or profits realized from the provision of services or supplies of goods.


Transactions on DLT assets that are subject to VAT need to be analyzed in the same way as any other transaction, i.e. by reference to the nature of the activities, the status of the parties and the specific facts and circumstances of the particular case.


Coins used as means of payment accepted by certain operator must, be treated like traditional currency used as legal tender, and so coins would be exempt without credit.

Digital Wallets

Services provided by digital wallet providers which require the payment of fees for allowing coin users to hold and operate a cryptocurrency would be exempt without credit. However, where the services of the digital wallet providers do not constitute transactions concerning currency similar to traditional currency, and where they cannot be regarded as transactions in ‘securities’ as defined by the VAT Act,  then the services would be subject to VAT.


In the case of mining, where it constitutes of a service for which compensation arises in the nature of newly minted coins, it falls outside the scope of VAT. However, should miners receive payment for other activities, such service would be subject to VAT.


A distinction between a peer to peer exchange and exchange where the platform’s services go beyond the mere provision of a trading facility, with an increased level of involvement in the transfer or exchange. Where as the peer to peer exchange is generally considered as an electronically supplied service and therefore one has to consider where it is provided. In the other case where the supply is of ‘coins’ or ‘securities’ it is likely that an exemption would apply in terms of article 135 of the VAT Directive.

Financial tokens

Where a financial token is issued simply to raise capital the issue would not give rise to VAT implications in the hands of the issuer, because the raising of finance does not constitute a supply of services or goods for consideration and falls outside scope of VAT

Utility tokens

Single-purpose Voucher (SPV): consideration payable to a taxable person for the issuance and transfer of an SPV representing taxable supplies of goods or services taking place in Malta would be immediately subject to Maltese VAT

Multi-purpose Voucher (MPV): where the place of supply and the VAT due on the underlying good or service is not known at the time of the issue of the voucher, this would amount to a multi-purpose voucher. VAT (if any) on the MPV’s underlying goods or services would be due at the time of the redemption of the voucher.


Where investors place their money at the ICO stage against tokens that are issued as a means of collecting funds for the development of a future project, such initial offering would not constitute a chargeable event for VAT purposes. Where no specific good or service is identified, nor a corresponding price for a supply could be fixed, nor would it be possible to determine whether the project undertaken would be realised whereby the investors could receive a return. Such transactions would be out of scope of VAT.

Similarly, there would be no transaction in the scope of VAT if the money placed by the investor would serve to acquire a security (equity, debenture, etc.) in the issuer.

On the other hand, where the tokens issued would give rights to identified goods or services for a specified consideration a chargeable event for VAT purposes could arise and its proper VAT treatment would have to be examined in that context such as in the case of utility tokens.

B. Duty on Documents and Transfers

The duty treatment in relation to any transaction involving DLT assets shall be in accordance with current tax provisions, jurisprudence and principles. Therefore, transactions which are subject to duty need to be analyzed in the same manner as any other transaction.

The duty treatment of transactions concerning any type of DLT asset will not necessarily determined by its categorization but will depend on the purposes and context in which the transaction is made.

In the case of a transfers which involve DLT assets which may have the same characteristics as ‘marketable securities’, as defined by the Duty and Documents Transfer Act (DDTA), they would be subject to duty in accordance with the applicable provisions of the DDTA.

In practice this means that Coins and Utility tokens would fall outside the scope of the DDTA. However, the transfer of Financial tokens meeting the ‘securities’ criteria would be subject to 2% duty, unless an exemption as available.

The guidelines can be read here.

For further information or assistance please contact WH team at or