Yes it is legal. The European Union has passed no unique legislation relative to the status of bitcoin as a currency, but has mentioned that VAT/GST is now not applicable to the conversion between traditional (fiat) forex and bitcoin.

VAT/GST and other taxes (such as income tax) still apply to transactions made using bitcoins for goods and services.

In October 2015, the Court of Justice of the European Union ruled that “The exchange of common currencies for units of the ‘bitcoin’ virtual currency is exempt from VAT” and that “Member States have to exempt, inter alia, transactions relating to ‘currency, bank notes and coins used as legal tender'”, making bitcoin a currency as opposed to being a commodity. According to judges, the tax need to not be charged due to the fact bitcoins should be dealt with as a means of payment.

According to the European Central Bank, traditional financial sector regulation is not applicable to bitcoin due to the fact it does not involve traditional financial actors. Others in the EU have stated, however, that existing policies can be extended to include bitcoin and bitcoin companies.

The European Central Bank classifies bitcoin as a convertible decentralized virtual currency. In July 2014 the European Banking Authority recommended European banks not to deal in virtual currencies such as bitcoin till a regulatory regime was in place.

In 2016 the European Parliament’s concept to set up a taskforce to monitor digital currencies to fight money laundering and terrorism, surpassed by 542 votes to 51, with eleven abstentions, has been sent to the European Commission for consideration.