Key takeaways
- Being paid in USDC or USDT doesn't change the VAT on what you sell. VAT is due in the normal way on the goods or services, and no VAT is due on the stablecoin itself.
- In the UK, HMRC says the taxable amount is the sterling value of the tokens at the point the transaction takes place. In the EU, amounts in another currency are converted at the rate rules of the VAT Directive.
- Converting stablecoins into pounds, euros or other tokens is exempt from VAT as a financial service, following the EU Court of Justice's Hedqvist judgment and HMRC's guidance.
- Invoice in your normal currency, record the rate you used and the transaction hash, and keep evidence of who and where your customer is: HMRC's October 2026 guidance stresses that blockchain records don't show this.
The short answer
If a customer pays your company in USDC or USDT, charge VAT on the sale exactly as you would for a bank transfer. The stablecoin is the payment, not the supply: VAT is due on the goods or services, and none is due on the token itself. In the UK, HMRC says the value for VAT is the sterling value of the tokens at the point the transaction takes place.
The simplest way to stay right is to invoice in your normal currency, say "USD 12,500.00 plus VAT, payable in USDC", and record the rate you used to convert to your VAT currency. This guide covers the UK and EU rules as general information; check the details with your tax adviser.
The UK rules
HMRC's Cryptoassets Manual sets out three points for businesses:
- VAT on the sale. "VAT is due in the normal way on any goods or services sold in exchange for cryptoasset exchange tokens."
- The value. The taxable amount is the "pound sterling value of the exchange tokens at the point the transaction takes place".
- No VAT on the token. "No VAT will be due on the supply of the token itself" when it's used to pay for goods and services.
HMRC also says that services exchanging tokens for legal tender or other tokens are exempt from VAT, under Item 1, Group 5, Schedule 9 of the Value Added Tax Act 1994.
In October 2026, HMRC published Help with VAT treatment of cryptoassets (GfC21). It says there are "no separate VAT rules for cryptoassets": the treatment depends on what is supplied and how it is used. It also stresses that businesses must collect enough information to apply VAT correctly, including who the customer is, where they're established, and whether they're a business or a consumer, because a payment on a blockchain doesn't carry that information.
The EU rules
There's no EU VAT rule specific to stablecoins, so the general rules of the VAT Directive apply.
- VAT on the supply. The taxable amount is the consideration the supplier receives. Paying in a stablecoin doesn't change that a supply of goods or services is taking place.
- Conversion. Under Article 91, where the amounts used to work out the taxable amount are in another currency, they're converted at the latest selling rate on the most representative exchange market when VAT becomes chargeable, or, if the member state allows, at the European Central Bank's rate.
- Exchange is exempt. In Hedqvist (C-264/14, October 2015), the Court of Justice held that exchanging traditional currency for bitcoin is a supply of services exempt under Article 135(1)(e), as a transaction in currency. HMRC applies the same exemption to exchanging exchange tokens for legal tender or other tokens.
Member states apply these rules through their own guidance, and some have published specific positions on crypto payments, so check yours.
Worked example
A UK company sells consulting services to a UK business customer for £10,000 plus VAT at 20%, and the customer pays in USDC.
- The invoice states £10,000.00 + £2,000.00 VAT = £12,000.00, payable in USDC, with the rate to be used.
- On the day of payment, the company records the USDC received, the pound-to-dollar rate it used, the source of that rate, and the transaction hash.
- It accounts for £2,000 of output VAT, as for any other sale.
- When it later converts the USDC to pounds, HMRC treats the exchange as exempt from VAT. Any difference between the value on the day of the sale and the amount received on conversion is a matter for its accounts and direct taxes, not VAT.
What to put on the invoice
- The price and VAT in your normal invoice currency, with the VAT rate and amount, as for any VAT invoice.
- The stablecoin, network and address for payment, and who bears network and withdrawal fees. The guide to accepting USDT and USDC from business customers covers the payment details.
- The exchange rate basis, for example "converted at the ECB reference rate on the date of supply", so the customer's VAT and yours agree.
- The customer's full name, address and VAT number where needed, for example for the reverse charge on cross-border B2B services in the EU.
Records to keep
- The invoice, and evidence of the customer's identity, location and business status
- The transaction hash, network, token and amount received
- The exchange rate used for VAT, its source and its date
- The conversion into your operating currency, if any, and the amount you received
The same records serve your auditor, your provider and your tax authority, which from 2027 will also receive data on stablecoin transactions from crypto providers under DAC8 and CARF.
How this works with Align
Customers can pay your company by bank transfer into named USD, EUR, GBP or AED accounts in your company's name, or, if agreed with Align, in USDC or USDT. Either way, money lands in your balance as USDC or USDT, and every payment appears in your account history for reconciliation. Align doesn't give tax advice: VAT on your sales is for you and your adviser.
Sources
- HMRC, Cryptoassets Manual, CRYPTO45000: Value Added Tax (accessed November 2026)
- HMRC, Help with VAT treatment of cryptoassets (GfC21) (updated 21 October 2026)
- Council Directive 2006/112/EC, the VAT Directive, Articles 73, 91 and 135
- Court of Justice of the EU, Case C-264/14, Skatteverket v David Hedqvist (22 October 2015), and Norton Rose Fulbright, ECJ rules that buying and selling bitcoin is exempt from VAT
Common questions
- Do I charge VAT if a customer pays in USDC?
- Charge VAT exactly as you would if they paid by bank transfer. The VAT treatment depends on what you supply, to whom and where, not on the payment method. HMRC says VAT is due in the normal way on goods or services sold in exchange for cryptoasset exchange tokens.
- Which exchange rate do I use for VAT?
- In the UK, HMRC says the taxable amount is the sterling value of the tokens at the point the transaction takes place. If your invoice is in another currency, such as USD, the usual VAT rules on converting foreign currency apply. In the EU, Article 91 of the VAT Directive sets the conversion rules, and member states may allow the European Central Bank's rate. Record the rate and its source on the invoice or in your books.
- Is VAT due when I convert USDC to euros?
- No. The EU Court of Justice held in Hedqvist (C-264/14) that exchanging traditional currency for bitcoin is exempt from VAT as a transaction in currency, and HMRC applies the same exemption to exchanging exchange tokens for legal tender or other tokens. The fee your provider charges for the conversion is for the provider's VAT position, not yours.
- Is this different for stablecoins and bitcoin?
- Not for the VAT on what you sell: in both cases VAT is due on the goods or services. HMRC's October 2026 guidance says there are no separate VAT rules for cryptoassets, and the treatment depends on what is supplied and how, not on how a token is described.
This guide is general information, not legal, tax or financial advice. Rules and providers' terms change; check the sources linked above and take advice on your own situation.