When browsing on the internet we discovered an article about Bitcoin and Belgium. This is on itself pretty rare. When reading multiple articles on “digital currency isn’t taxable in Belgium yet” the tone is overly enthusiastic. We would caution all of you to be too enthusiastic about it and we will have to correct some conclusions that the other news sites have drawn. Mainly because other news sites do not know Belgium and the current situation as well as someone who is living in Belgium and has decades of experience dealing with the Belgian government and doing research in Belgium.
First we need to be careful when approaching the source material, namely an official looking document of the” general administration of tax treatment/ tax management”. It appears that this “document” is genuine. However without actually touching and examining the document on authenticity it is very hard to say if it is really genuine. Photoshop has been used in the past to bamboozle people.
So let’s say for the sake of argument that the document is genuine. Let’s take a closer look at the document and what it really says. This “letter” isn’t a law or any other binding legal document. It is just a response from M. Pirotte on a question about digital currencies. The important part is on the top of the letter where it says: “ J’ai pris connaissance de votre demande d’avis”, which translated to English means: I’ve seen your request for advice ( on the subject of digital currencies). Read the important words ADVICE, not law or some such thing, ADVICE.
Basically the document is saying that “ they are waiting on the European parliament to make a decision what to do about digital currencies… and because of that digital currencies are still viewed as something illegal and digital currencies legal payment method”. This can be read in the document: “ L’administration fiscale belge vues les moyens de paiement virtuel .. digital currencies.., comme une monnaie virtuelle qui n’est pas un mode de paiement legal”.
So when some writers report on “Belgium gives green light for digital currencies” they are woefully wrong. Agreed, French is very hard for most and there is an added difficulty with the nuances and legal mazes created by the Belgian government. Only someone who knows the legal and financial system can navigate it.
Now most of the writers would say: “ hey but the letter is referring to a law”. Yes, they refer to the art.44 paragraph 3, section 7. which states that: “handelingen, bemiddeling daaronder begrepen, betreffende deposito’s, rekening-courantverkeer, schuldvorderingen, cheques en andere handelspapieren met uitzondering van de invordering van schuldvorderingen”. So this basically this article 44, paragraph 3 section 7 is saying that: every action concerning deposit accounts, account traffic, debt, debt negotiation, mortgages, cheques are exempt from tax except in certain cases.
Laws are very complex and just referring to one small item in the law can be interpreted in different ways. Furthermore there aren’t explanations given about the definitions of said summed up items in art.44, paragraph, section 7. So some lawyer will say it means this and other lawyers says it means that.
This has been addressed in the opening sessions of the Inside Bitcoins conference in London by Gavin Wood. He proposed that laws should become more “digital”. What he means by that is that current laws are purposefully vague and most of the time everything can be interpreted in a different way. To get clearer laws, we need to eliminate the ambiguity of laws so there won’t be any confusion.
Because of the lack of accurate definitions of terms used in laws and the vague laws themselves every “ legal expert”(like lawyers and people that work in law firms) can give different views so it is all from a certain point of view and they will still be correct in their assumptions. However the government has the last word in everything so it is just a “wait and see game”.
What did we learn from this document? The tax institution of the Belgian government is regarding digital currency as an “illegal currency” and not a viable payment method. The Belgian government is waiting to see what the European Union is going to do about crypto. Does this mean, like some writers suggest, that digital currencies are allowed to be traded , etc in Belgium or that the Belgian government is having a positive attitude towards Bitcoin and altcoins? NO, absolutely NOT!
This document only states that the Belgian government is just waiting on the European legislative bodies to slap some law or laws together concerning VAT/taxes concerning digital currency. Now some writers also claim that trading BTC and altcoins is “no problem and are exempt from tax”.
Again this is another assumption that is false. If you day trade anything, from precious metals to stocks on an exchange, and if you are just an individual you can risk hefty fines. Daytrading is prohibited in Belgium, except if you are a bank or working for an officially licensed bank, and the fines on that are wide-ranged (from confiscating your money to paying fines over 200% of the value of your stocks and commodities that you day traded). Granted they do not come down on you for making 2000 euros extra in a year but if its 20 000 or 200 000 euros that is a whole other ballgame. However punishment like this are rarely executed and are more a stick behind the door policy to hit certain people when they cross the line so to speak.
If you look at the actual law they refer to, not the senate debate but the actual law art.44, paragraph 3 section 7, digital currency or the aspects of it aren’t recurring in that law. As such a hard-nosed government official can claim that every digital currency is “illegal” and can be confiscated. Digital currencies aren’t for collecting debt or writing out cheques, or even trading digital currencies. There isn’t ANY law that tells us that trading Bitcoins on exchanges or otherwise, is exempt from tax.
If something is fairly new and there isn’t a law that exactly gives directions on how to proceed, most legislative branches of government will implement already existing laws and modifying it. So if you want to trade crypto you will fall under the same laws as if you were trading stocks and precious metals.
On a personal level the label of “illegal” that has been used in the letter does trouble me. For instance they do not say what the government or the government representative means with the term of “illegal”. Does it has the same connotation as hard drugs, where they crack down hard and confiscate everything, or is it more the “soft drugs” label where if you have only a small amount you won’t get into trouble with the law.
So if you actually take a minute and really examine what is being said in the official document, provided it is genuine, you will conclude that everything isn’t all black and white as most writers would like you to believe. Does this mean that these people are bad writers? No of course not but if you are schooled at a university and make these kinds of mistakes it does not show your education in a good light.
On a closing note we would stress that everyone is very wary about these things because 1) it isn’t a law, it is an answer to a question; 2) the referred laws in said letter do not describe the activities of crypto at all( like talking about debt collecting/cheques and things like that); 3) though the document looks authentic photoshop is a known and often used tool for faking documents; 4) certain terms are cause for pause ( like the word “illegal”); etc.
http://ccff02.minfin.fgov.be/KMWeb/document.do?method=view&id=415e80e1-68fc-4c04-b099-6b6a8dd1b8bc#findHighlighted scroll down to art. 44, paragraph 3, number 7. It is about deposit accounts, cheques and loans. ( This link is in Dutch)
http://ccff02.minfin.fgov.be/KMWeb/search.do?searchText=article+44&method=simpleSearch¶ms.sortOrder=Relevance¶ms.searchText=article+44#loadAnchor ( here is the English version of the Belgian fisconet plus. However sometimes the English version isn’t up to date or gives you the wrong information. That is why it is best to look laws up in the native languages as Dutch and French.)
http://www.cryptoarticles.com/crypto-news/2014/5/26/belgian-politicians-connect-bitcoin-to-life-insurance-derivatives This is an article we did about an ACTUAL LAW that mentions Bitcoin.