Belgium Needs New Regulatory Framework For Crypto Trading
Belgium's cryptocurrency market now has more than 1,000 crypto-assets circulating, valued at billions of dollars. In the absence of regulation, an inappropriate crypto activity could affect investors. Belgian financial authorities have repeatedly warned citizens and companies about the risks of using virtual currencies because they’re not legal instruments of payment at the moment.
However, the only significant restriction related to cryptocurrency in Belgium is the ban on advertising financial products where income directly or indirectly depends on cryptocurrencies. The law doesn’t apply to digital money itself, but to its derivatives. Financiers emphasize that the sale, purchase, or use of digital currencies, as well as all related products, should be legal.
Any Belgian citizen who makes revenue from professional activity with cryptocurrency, acting as a trader, miner, or providing exchange services, is obliged to pay tax from 25% to 50%, depending on the amount of profit received, and to specify information about the income in the tax return.
However, if an individual has a crypto business as a hobby and doesn’t earn a living from it, then this kind of transaction is considered a private asset and the profits derived from such activities aren’t subject to tax. If the individual speculates with cryptocurrency, then his income is taxed at the rate of 33% as capital gains.
Belgian legislation doesn’t distinguish between income derived from commercial activities or from trading in cryptocurrency. In either case, a legal entity must pay a corporate income tax of 25%. Any Belgian company that receives income from the crypto business like trading or exchange of virtual currencies must pay tax according to the standard corporate income tax rules. Corporate tax is also levied on income from crypto transactions.
The European Court of Justice qualifies trading in digital currency as a financial transaction. In other words, payment in cryptocurrency for goods and/or services is considered as payment and thus, isn’t subject to VAT.