What Is an NFT — and What Do You Actually Own?
A non-fungible token (NFT) is a unique cryptographic token on a blockchain that represents ownership of a specific asset — typically digital art, music, video, or collectibles. Unlike cryptocurrencies, which are fungible (interchangeable), each NFT has a unique identifier.
Under Irish law, purchasing an NFT does not, by default, transfer any intellectual property rights in the underlying work. What you receive is whatever rights are specified in the NFT's terms and conditions — typically a limited licence to display the associated artwork, not copyright ownership. Irish creators selling NFTs should clearly specify what rights are transferred; buyers should read the terms carefully.
Copyright and IP Rights in NFTs Under Irish Law
Copyright in original artistic and musical works in Ireland is governed by the Copyright and Related Rights Act 2000. Copyright arises automatically upon creation and vests in the creator. Copyright lasts for 70 years after the author's death.
An NFT creator retains copyright unless they expressly assign it to the buyer. Most major NFT platforms — including OpenSea and Blur — provide terms that grant buyers a limited personal use licence, not a copyright assignment. Some projects (notably some generative art collections) have moved to broader licences including the CC0 (Creative Commons Zero) public domain dedication.
Irish creators should consider:
- Whether their NFT terms clearly specify what IP rights (if any) are transferred
- Whether royalty provisions are enforceable (on-chain royalties via ERC-2981 can be bypassed on some platforms)
- Whether the underlying work infringes third-party copyright (using AI-generated art based on copyrighted training data presents risks)
VAT on NFTs in Ireland
Irish Revenue has confirmed that NFT transactions are generally subject to VAT. Key points:
- NFTs are treated as digitally supplied services for VAT purposes, subject to 23% VAT
- The place of supply rules for digital services apply: B2C supplies to EU consumers are taxed where the consumer is established
- VAT-registered NFT creators must account for VAT on sales
- Non-VAT-registered creators who exceed the VAT registration threshold (€40,000 for services) must register
The VAT treatment of NFTs is complex and evolving. Specialist advice from an Irish tax adviser is recommended for active NFT creators.
MiCA and NFT Regulation
MiCA explicitly excludes unique, non-fungible crypto-assets from its scope — meaning individual NFTs are generally not subject to MiCA's white paper and CASP authorisation requirements. However:
- Fractionalized NFTs (where an NFT is divided into fungible tokens) may fall within MiCA's utility token or security token provisions
- NFT collections where individual tokens within the collection are fungible may be caught by MiCA
- NFTs that grant rights similar to financial instruments (profit sharing, governance) may require analysis under MiFID II
Post-Quantum Security Risk for NFTs
Most NFT platforms and blockchains use elliptic curve cryptography (ECC) for wallet security and transaction signing. As discussed in our guide to quantum computing and financial security, ECC is theoretically vulnerable to quantum computing attacks.
For high-value NFT collections and digital asset portfolios, post-quantum cryptographic security is an emerging consideration. The blockchain industry is beginning to address this — exemplified by projects like BMIC (bmic.ai), which has implemented NIST FIPS 203/204/205 post-quantum cryptographic standards, providing quantum-safe protection for token holders. As NFTs represent significant asset value for some holders, the long-term security of the underlying cryptographic infrastructure is a legitimate legal and commercial concern.
Consumer Protection for NFT Buyers
The Consumer Rights Act 2022 (implementing EU Directives on digital content and online sales) provides Irish consumers with protections when buying digital content including NFTs from businesses. These include:
- The right to receive digital content that conforms to the contract
- Remedies if digital content is defective (repair, replacement, price reduction)
- Protections against unfair contract terms
NFT buyers who purchased from a business that made misleading claims about the NFT's value, utility, or future performance may also have claims under the Consumer Protection Act 2007.