Bitcoin, Belgium and VAT

Important: This article is not a legal advice!

In September 2014, after a request from the Belgian crypto currency trading company working under the commercial name “Belgacoin.com“, the Belgian Belgium Tax Authority (Service Public Fédéral Finances)  issued a statement (GTVA20141533/TL/MP) indicating that crypto currency trading transactions are not subject to the 21% of Belgian VAT (Value Added Tax, French: TVA), according to Art. 44, § 3, 7° of the Belgian VAT law. This applies companies paying taxes in Belgium.

The “VAT Question” is a widely discussed issue in the European Bitcoin and crypto currency community. It turns around the question whether profits made by acting as broker are subject to European Valued Added Tax, in the same way as profit made by trading physical goods.

The question is not whether the “speculative” profit made by buying “low and selling high” is subject to VAT, but rather the profit that a broker makes when taking (fiat) money from a person to buy Bitcoins for this same person, adding his margin to cover his efforts.

As the UK, Belgium has taken a liberal position on trading crypto currencies. Other countries like Poland and Estonia still have VAT imposed respectively on Bitcoin trading.

This might however change seeing the currently still open case C-264/14 at the Court of Justice of the European Union, which passed the hearing phase recently (17/06/2015).

The cases C-264/14 treats the question: “Is Article 2(1) of the VAT Directive 2006/112/EC to be interpreted as meaning that transactions in the form of what has been designated as the exchange of virtual currency for traditional currency and vice versa, which is effected for consideration added by the supplier when the exchange rates are determined, constitute the supply of a service effected for consideration? If the answer to the first question is in the affirmative, is Article 135(1) to be interpreted as meaning that the abovementioned exchange transactions are tax exempt?“. And the result might very well reshuffle the cards.

References:
https://bitcoinmagazine.com/16810/vat-bitcoin-update-bruxelles/
http://bitcoinarticles.net/belgian-federal-public-service-bitcoin-transactions-not-subject-to-vat/
http://www.coindesk.com/belgium-tax-vat-bitcoin-transactions/
http://bitcoinvox.com/article/1050/bitcoin-not-subject-to-vat-in-belgium
http://cointelegraph.com/news/112640/belgiums-zero-vat-and-inclusive-dialogue-reveal-refreshingly-progressive-stance
https://twitter.com/Belgacoin
https://www.belgacoin.com/

 

UPDATE! – 22 Oct 2015

Bitcoin transactions will be exempt from Value Added Tax (VAT), the European Court of Justice (ECJ) has ruled.

http://www.coindesk.com/bitcoin-is-exempt-from-vat-says-european-court-of-justice/

 

Leave a Reply

Your email address will not be published. Required fields are marked *