Belgium clarifies position on Cryptocurrencies and NFTs
The accounting treatment of cryptocurrency is still unclear, as crypto coins are not considered a recognised valid means of payment in Belgium. Based on an opinion from the Accounting Standards Commission nr 2021/16 of 20 October 2021, cryptocurrencies should not be classified under cash or cash investments, but under other receivables.
For income tax purposes, cryptocurrencies are considered to be foreign currency. Profits or income arising from the purchase and resale of cryptocurrencies in the context of a business are taxed as business profits. For companies, those profits are subject to corporate income tax.
In other cases, income from cryptocurrency will be taxed as miscellaneous income or income from speculative transactions, which is subject to PIT at the rate of 33%. Income from cryptocurrency is, however, exempt if it results from the normal management of private wealth.
Exchange transactions in Bitcoin and other cryptocurrencies are exempt from VAT. This is also the case for intermediary services provided by a third party in the context of an agreement for the transfer of Bitcoins and other cryptocurrencies.
Finally, an exemption also applies to financial transactions involving other non-traditional currencies, to the extent that these currencies have been accepted by the parties of a transaction as an alternative means of payment.
Non-Fungible Tokens (NFT)
An NFT is a digital asset that represents a real-world object like a work of art, music or in-video game item. They are often auctioned online. For investors, NFTs are similar to speculating on the stock market.
Because NFTs are not cryptocurrencies, the CBN opinion nr 2021/16 for accounting purposes does not apply. An individual decision can be made by the CBN on the accounting treatment of a particular type of cryptoasset. This analysis will be carried out from the perspective of the issuer of the crypto-assets, of the investor; and of the owner of the underlying assets.
A sale transaction with NFTs is treated as a transfer of "rights in rem", i.e. a right which rests on an object or good. The tax treatment for income tax is identical to the tax regime for capital gains regardless of the payment method (cryptocoins, foreign currencies or euros).
Capital gains are generally subject to 25% corporate income tax for companies and 33% personal income tax for individuals.
NFTs are not considered as a means of payment, but as digital collectibles or digital art objects. Trading in NFTs constitutes a supply subject to VAT, insofar as these transactions take place in Belgium.
- The exemption of Article 44(3)(9) of the VAT Code does not apply, as this applies only to transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest.
- In addition, the supply of digitised products is generally regarded as a service provided by electronic means. To the extent that the sale of NFTs takes place in Belgium, the standard VAT rate of 21% applies.
- Finally, since NFTs are not goods, taxable resellers of NFTs cannot invoke the special margin regime of Article 58(4) of the VAT Code.