Belgium’s Federal Public Service Finance (FPS) has issued a new statement finding that domestic digital currency transactions are currently not subject to value-added tax (VAT). The ruling from the tax body was revealed in an email to local digital exchange Belgacoin, which was concerned it would need to pay VAT on digital currency trades.
An FPS spokesperson confirmed that bitcoin transactions are currently exempt from the country’s VAT Code, as bitcoins are not a legal means of payment. However, the agency did suggest that this exemption may only be temporary.
FPS senior advisor and investigator Chantal Pahaut said: “The Belgian position is likely to change according to the position of the European Committee, which is trying to define a harmonization at European level.”
The clarification comes at a time when many European countries are seeking larger guidance on the issue from the European Court of Justice (ECJ) as to whether digital currency exchanges need to pay VAT taxes on service fees. The statements also mark the first time Belgium has provided insight into its policies on the issue.
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The FPS said that bitcoin transactions are currently exempt from VAT under Article 44 of the country’s VAT code, telling Belgacoin that should the determination be reversed, a retroactive tax will not be applied.
Belgacoin founder André Powroznik said the decision removes a critical uncertainty for his company, which buys and sells bitcoin as well as a host of altcoins including litecoin, dogecoin and peercoin. Powroznik said:“[The email is] vastly sufficient for me – in the future, it will not be contradicted by another VAT controller.”
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A form of consumption tax, VAT is assessed on the cost of the product, minus the cost of materials. In the case of Belgacoin, Powroznik indicated his company would need to add an additional 21% to the price of the digital currency it sells in order to cover this added expense.
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