The Court of Justice of the European Union is to decide on Thursday whether tax regulations are applicable to bitcoin digital currency.

The court has been reviewing the European legislation to come to a conclusion on whether the transactions between digital and fiat currencies should be seen as a service and whether they should be tax-exempt or not.

The decision will come as a resolution of the dispute between a Swedish web forum moderator, who wanted to sell bitcoins on his website, and the Swedish tax authority. The request was filed to the Court of the EU in June. A month later the Euro court Advocate General said that exchange between bitcoin and fiat currencies is exempt from tax regulations. In June the tax authority of Switzerland confirmed that bitcoin in this non-EU country is VAT-free.

Earlier this year another dispute started when a Stockholm-based BTCX exchange was requested by the Swedish tax agency to disclose information about its transaction history.

The WSJ observers believe that in case if value-added tax is imposed on bitcoin the rapid growth of the transactions with digital currencies might be “caped”.

Maria Rudina