Virtual currencies can be exchanged for free in Europe

     Virtual currencies can be exchanged tax-free in Europe, according to a recent ruling by Europe’s top court.

     Bitcoin and its peers can now be treated the same as traditional currencies, according to the European Court of Justice.

     In a statement, the European Court of Justice said that bitcoin transactions “are exempt from additional taxation, provided that they are carried out in relation to a range of legal transactions involving currency, checks and coins.”

     The ruling stems from a dispute in Swiss courts in which Swiss national David Hedvist applied for a license to operate an online bitcoin exchange. Sweden's Tax Law Board initially told Hedvist that bitcoin was exempt from additional taxes, but the Swiss tax authorities opposed the decision.

     Bitcoin is a virtual currency that allows users to exchange credit for goods and services online. Although no central bank issues bitcoins, they can be created online by computers and used to perform difficult tasks, a process called mining.

     The ruling is a boon to the nascent industry by paving the way for cheaper transactions within the EU. Jonathan Rogers, a partner at Taylor Wessing, an international law firm that provides financial services regulatory services, sees it as an opportunity for emerging financial services models.

     "(The ruling is) a shot in the arm - bringing growth and consolidation," he said in an email to CNBC.

     “More clarity on how virtual currencies should be regulated can now be brought to the table, which will increase their credibility and consumer confidence; in turn, virtual currencies will become a more important critical mass in the financial services system.”

     The price of Bitcoin rose slightly at the time of the press release, and rose nearly 3% on October 22 to close at $8.

     In September, the U.S. Commodity Futures Trading Commission (CFTC) said Bitcoin would be classified as a commodity alongside gold and oil.