A new statement by Belgium’s Federal Public Service Finance informed that no transaction of domestic digital currency are subject to value-added tax currently.This ruling sent by the Belgian tax body was revealed in an email to Belgacoin, a local digital currency exchange.The exchange was concerned that it needed to pay VAT on their digital currency trades but was relieved to get the e-mail.
A federal Public Service spokesperson confirmed that the e-mail stated correctly.Currently, bitcoin transactions are exempt from the Belgium’s VAT Code. This is because bitcoins are not considered as a legal method of payment.This might not be a permanent rule though. From a comment by the agency, it was suggested that the exemption may only be temporary.Chantal Pahaut, senior advisor and investigator of Federal Public Service stated in a comment that it is very likely that the Belgian position will change based on the position of the European Committee.
The committee is trying to create a harmonization at European level.The clarification is provided now, when several countries in the European region are looking for superior guidance from the European Court of Justice on the matter.They want clear information on whether crypto currency exchanges require VAT payment on the service fees.This is perhaps the first time that Belgium provided insight into the policies on the issue.According to the FPS, Bitcoin transactions are exempt from VAT at the moment under Article 44 of Belgium’s VAT code. They reassured the inquiring company, Belgacoin, that if the rules are ever reversed, they will not have to pay a retroactive tax.
Andre Powroznik, founder of Belgacoin, said this decision eliminates a very critical uncertainty for his firm. The firm purchases and sells Bitcoin and also a host of altcoins like litecoin, peercoin and dogecoin.The founder referred to the e-mail and stated that it was enough for him. He announced this news with an official post on Reddit.Powroznik explained that the decision brings Belgium at the same level as the UK as the United Kingdom too eliminated its VAT on digital currency trading in March.
VAT is a kind of consumption tax which is assessed by subtracting the materials cost from the product’s cost. Powroznik stated that Belgacoin would need to add an extra 21% to the price of the Bitcoins it sells to cover the extra expense of VAT.This decision to eliminate tax highlights a difference of opinion in European countries.The UK and Belgium have taken a liberal position on trading Bitcoin but other countries like Poland and Estonia still have 23% and 20% VAT imposed respectively on Bitcoin trading.Experts suggested that the ECJ’s ruling on Value Added Tax for EU countries might not be imminent.Esteban van Goor, an European tax lawyer, informed in an interview held in August that the countries could take as long as 2 years to come to the same decision of removing VAT.Powroznik thinks the new rule in his country is positive as it helps them make it easier for the customers.
