The Belgian economy is the 6th largest in the Eurozone and the government is consistently working towards improving taxation standards in order to attract even more international investments, encourage innovation, and at the same time protect society from fraudulent activities and unjust taxation.
The Belgian General Administration of Taxes is responsible for the collection and management of taxes, as well as their correct and fair calculation. The authority considers cryptoassets claims, not legal tender, and hasn’t yet introduced a comprehensive taxation framework for crypto businesses, which means that Belgian crypto businesses are obligated to follow general taxation rules. However, the general framework can’t provide clear rules for such crypto-related activities as mining, staking, and DeFi or various types of tokens. Therefore, you should seek individual consultation with our legal consultants before deciding to start a new crypto business in Belgium.
In addition to national legislation, you should also become equipped with knowledge of international taxation standards, which are dictated by international organisations. For instance, the Organisation for Economic Cooperation and Development (OECD), which Belgium is a member of, has introduced a new international tax transparency framework, the Crypto-Asset Reporting Framework (CARF). Its purpose is to improve crypto taxation and tax reporting standards through automated tax reporting and information-sharing among international tax authorities.
Another important set of rules is laid out in the EU’s Directive on Administrative Cooperation (DAC) which is aligned with CARF in order to minimise administrative burdens that crypto businesses have to deal with. DAC is designed to ensure fair and efficient taxation across member countries and covers the reporting and exchange of information between the EU’s tax authorities involving income or revenue generated through cryptoassets by EU residents.
Advantages of the Belgian Tax System
When it comes to international networks, Belgium is certainly the leader, as it has signed over 150 international agreements on the elimination of double taxation. They allow businesses that have an international presence to avoid being taxed twice in two different countries. They generally clarify how tax liabilities are determined on the basis of tax residence, what taxes must be paid in accordance with Belgian legislation, and where Belgium has to forgo its right to tax a business or an individual. These agreements are modelled after OECD’s Model Taxation Convention in Income and Capital which ensures minimum standards, but each of them is also tailored to meet the needs of two specific contracting parties.
Belgium is also a leader in delivering support to businesses engaged in research and development (R&D) activities, and is therefore considered a very important country to build innovative projects. The taxation environment is designed to reduce tax burdens and provide legal certainty to investors carrying out R&D activities in Belgium.
The Innovation Income Deduction allows a tax deduction of up to 85% of the net income sourced from innovation-related activities in Corporate Income Tax, which results in effective corporate taxation at a 3.75% rate. It also covers such intellectual property rights as copyright-protected software. Moreover, young innovative companies and companies paying wages to researchers engaged in research projects conducted in partnership with universities and colleges of the EEA or with recognised scientific institutions are entitled to receive wage subsidies on their researchers’ salaries which are fully exempt from taxes.
Other R&D incentives include the tax credit for eligible research and development costs, which can either be deducted immediately as business expenses or be recorded as an intangible fixed asset and depreciated over at least three years. Expenses incurred by research activities, including R&D equipment and patents, are immediately offset. Another advantage of this tax credit is that it is refundable if it hasn’t been deducted for five subsequent tax years.
Corporate Income Tax
In Belgium, the standard Corporate Income Tax rate is 25% which is among the highest rates in Europe. Corporate income is taxed based on the company’s tax residence status. Tax residents are subject to paying the tax on their worldwide income, and non-residents are obligated to pay the tax on their income sourced in Belgium. A company is considered a resident of Belgium for tax purposes if it has its place of effective management and central administration or registered office in Belgium.
Generally, any Belgian company that sources income from trading and exchanging cryptocurrencies is subject to paying the standard rate. However, not every crypto-related activity is taxable. For instance, if a company engages in crypto mining activities, it doesn’t trigger a taxable event. Only capital gains received from the sale or use of the cryptocurrencies as a means of payment are taxable.
The standard Belgian VAT rate is 21%. Needless to say, that it’s aligned with the EU directives and applies to the majority of products and services sold in Belgium. Generally, all crypto companies operating from Belgium or selling their services to Belgian residents are required to register as VAT payers in Belgium. If companies liable for VAT don’t register in a timely manner, they can expect to receive a fine of 250 EUR and a penalty of 10% of the VAT due.
However, when it comes to crypto transactions, the Belgian VAT Administration has aligned its rules with the decision made by the Court of Justice of the European Union (CJEU) which ruled out that the VAT exemption for transactions involving currency, banknotes, and coins used as legal tender also applies to such non-traditional currencies as Bitcoin.
Regarding VAT registration thresholds, the following rules apply:
- 35,000 EUR per annum threshold for foreign companies selling products to Belgian consumers through the internet
- No VAT registration threshold for non-resident companies providing taxable supplies in Belgium
- Small Businesses whose annual turnover in Belgium doesn’t exceed 25,000 EUR are VAT-exempt (however, they can optionally register as VAT payers)
Capital Gains Tax
In Belgium, the Capital Gains Tax is levied differently on profits received from the sale or disposal of assets made by companies or individuals who can be either residents or non-residents. There are two different types of Capital Gains Tax rates – one for gains treated as professional income and another for gains treated as speculative income.
Gains treated as professional income are subject to the following progressive tax rates:
- From 0 to 13,540 EUR – 25%
- From 13,541 to 23,900 EUR – 40%
- From 23,901 to 41,360 EUR – 45%
- From 41,361 EUR – 50%
If capital gains are treated as speculative income, they’re subject to tax at a flat 33% rate and must be disclosed in tax returns as miscellaneous income. This type of gain is also subject to communal taxes at 0-9% rates. Crypto gains and losses, including exchanging one cryptocurrency for another, are generally considered speculative income and are therefore taxable at the 33% rate which essentially is the main Belgian crypto tax.
The taxable amount is calculated by subtracting the costs of the sold cryptoassets and fees or commissions paid in connection with the sale from the proceeds of the sale. If a company that has realised capital gains is also subject to Corporate Income Tax, the gains from cryptoasset transactions also have to be included in taxable profits, with losses being deductible.
Belgian companies paying dividends, interest, royalties, and service fees are required to pay Withholding Tax at a 30% rate. In some cases, a reduced rate or exemption might be applicable in accordance with Belgian and European legislation. For instance, the exemption is available in the event of the distribution of profits generated by a Belgian subsidiary to an EU parent company when the legal business structures of both these companies are included in the EU Parent-Subsidiary Directive, and when both are subject to Corporate Income Tax, and when the parent company holds, for at least one year at least 10% of shares in the capital of the distributing company.
In Belgium, cryptoasset donations and gifts are taxed at progressive tax rates ranging from 3% to 27% depending on the region where the gift is registered. The taxable amount is calculated by subtracting the cost of the gift and fees or commissions paid in connection with the donation from the market value of the gift at the time of the donation. The tax is applicable when donations are made between spouses, children, parents, grandparents, and grandchildren. Belgian Gift Tax is due once a gift is made by signing a Belgian notary deed and the notarial deed is registered.
If you’re determined to have a successful crypto business in Belgium and are looking to optimise your taxes, our highly qualified and experienced legal consultants here at Regulated United Europe (RUE) will be pleased to assist you. We very well understand and closely monitor local and international taxation rules applicable to crypto businesses, and strive to ensure that our clients not only comply with local regulations but also operate in a tax-efficient way. Moreover, we’re more than happy to help you with the formation of a new Belgian crypto company, crypto licensing, and financial accounting. Book a personalised consultation now to receive comprehensive legal advice.
FREQUENTLY ASKED QUESTIONS
In order to attract even more international investments, promote innovation, and protect society from fraudulent activities and unfair taxation, the Belgian government has consistently worked toward improving taxation standards. It is the 6th largest economy in the Eurozone.
Taxes are collected and managed by the Belgian General Administration of Taxes, as well as calculated correctly and fairly. Due to the absence of a comprehensive taxation framework for crypto businesses, the authority considers crypto asset claims to be claims, not legal tender, which means that Belgian crypto businesses are required to follow general taxation rules. Mining, staking, or DeFi activities or various types of tokens are not clearly regulated in the general framework. Our legal consultants should be consulted before starting a crypto business in Belgium so that you can make an informed decision.
Along with national legislation, it is important to understand international taxation standards dictated by international organizations. A new international tax transparency framework, the Crypto-Asset Reporting Framework (CARF), was recently introduced by the Organization for Economic Cooperation and Development (OECD), which Belgium is a member of. Through automated tax reporting and information sharing among international tax authorities, it aims to improve crypto taxation and tax reporting standards.
To minimise the administrative burdens that crypto businesses have to deal with, the EU has also implemented the Directive on Administrative Cooperation (DAC) which is aligned with CARF. By DAC, the EU's tax authorities report and exchange information regarding income or revenue generated by EU residents via crypto assets. It is designed to ensure fair and efficient taxation across the EU's member states.
The Belgian government has signed over 150 international agreements on reducing double taxation, making it the leader in international networks. Businesses with international presences are able to avoid being taxed twice. As a rule, they clarify how tax liabilities are determined based on one's home jurisdiction, what taxes are required under Belgian law, and when Belgian law prohibits Belgium from taxing an individual or business. Modeled after the OECD's Model Taxation Convention in Income and Capital, these agreements ensure minimum standards, but they are also tailored to the preferences of each party.
Furthermore, Belgium is one of the nation's leaders in providing research and development (R&D) support to businesses, making it a very important country for innovative projects. R&D activities in Belgium are taxed in a way that minimizes tax burdens and provides legal certainty for investors.
In Corporate Income Tax, an Innovation Income Deduction of up to 85% can be applied to taxable income attributable to innovation-related activities, resulting in effective taxation at 3.75%. Additionally, copyright-protected software is covered by this law. Further, innovative companies and companies that pay wages for researchers who are engaged in research projects with universities, colleges, or recognised scientific institutions within the European Economic Area are eligible to receive tax-free wage subsidies on the salaries of their researchers.
Among the highest rates in Europe is the 25% standard corporate income tax rate in Belgium. Corporations have a tax residence status that determines whether they are taxed on their income. Those who are tax residents pay taxes on their worldwide income, and those who aren't are responsible for taxes on their Belgian income.Companies with their place of effective management, central administration, or registered office in Belgium are considered Belgian residents for tax purposes.
Trading and exchanging cryptocurrencies generates income for Belgian companies, which are subject to the standard rate. The tax treatment of crypto-related activities varies, though. Crypto mining, for example, does not trigger a taxable event when a company engages in the activity. A cryptocurrency's capital gains are taxable only when they are sold or used to pay for goods and services.
In Belgium, VAT is charged at a standard rate of 21%. Obviously, all products and services sold in Belgium must comply with the EU directives. As a general rule, crypto companies selling their services to Belgian residents or operating in Belgium must register as VAT payers. Tax-liable companies that fail to register in a timely manner can be fined 250 EUR and penalized 10% of the VAT they owe.
The following rules apply to VAT registration thresholds:
- For foreign companies selling to Belgian consumers online, there is a 35,000 EUR threshold per year
- Companies providing taxable supplies to Belgian customers do not have to register for VAT
- The turnover of small businesses in Belgium that do not exceed 25,000 EUR is VAT-exempt (although VAT payers can optionally register).
Companies or individuals who sell or dispose of assets in Belgium can either be residents or non-residents, and the Capital Gains Tax is applied differently. The Capital Gains Tax is imposed at two different rates - one for gains treated as professional income and one for gains treated as speculative income.
These progressive tax rates apply to professional income gains:
- From 0 to 13,540 EUR – 25%
- A 40% increase from 13,541 to 23,900 EUR
- The difference between 23,901 and 41,360 euros is 45%
- From 41,361 EUR – 50%
It is required that capital gains be reported on tax returns as miscellaneous income if they are considered speculative income. Additionally, communal taxes are charged on this type of gain between 0% and 9%. The 33% Belgian crypto tax applies to crypto gains and losses, including the exchange of one cryptocurrency for another.
Companies in Belgium that pay dividends, interest, royalties, or service fees must pay a 30% Withholding Tax.Depending on Belgian and European legislation, a reduced rate or exemption may be applicable. For instance, the exemption is available in the event of the distribution of profits generated by a Belgian subsidiary to an EU parent company when the legal business structures of both these companies are included in the EU Parent-Subsidiary Directive, and when both are subject to Corporate Income Tax, and when the parent company holds, for at least one year at least 10% of shares in the capital of the distributing company.
Depending on the region where the gift is registered, crypto asset donations and gifts in Belgium are taxed at progressive rates ranging from 3% to 27%. In order to calculate the taxable amount, the market value of the gift is subtracted from the cost of the gift, as well as any fees incurred in connection with the donation. It applies to donations made by children, parents, grandparents, and grandchildren between spouses, children's spouses, and parents' spouses. Once a Belgian notary deed is registered and a Belgian gift is made, Belgian Gift Tax is due.
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