Belgium plans to use $2.4 billion in taxes collected from frozen Russian assets to aid Ukraine’s reconstruction.
Brussels, October 11, 2023 – In a move with potential implications for the ongoing Ukraine crisis, Belgium, a European nation where a substantial portion of frozen Russian central bank assets is held, is planning to collect a substantial 2.3 billion euros, equivalent to $2.4 billion, in taxes from these assets. This tax collection initiative is aimed at providing financial support for the reconstruction of Ukraine, a country that has been grappling with the aftermath of geopolitical tensions.
The European Union, in collaboration with the Group of Seven (G7) countries, has been actively engaged in discussions regarding the possibility of leveraging the interest generated from over 300 billion euros of immobilized Russian public money to fund essential initiatives in Ukraine. This move represents a unique financial approach to addressing a pressing global issue.
The significance of Belgium’s role in this financial endeavor becomes apparent when considering that over 200 billion euros of these frozen assets are held within European borders, and approximately 125 billion of this sum is expertly managed by the Belgian clearing house, Euroclear. However, it’s important to note that Euroclear has declined to comment on this matter, and Russia’s central bank has yet to respond to inquiries, making the situation complex and delicate.
This decision from Belgium comes after the European Commission announced its intention, back in July, to present a proposal addressing the legality and feasibility of using these frozen assets for the greater good once the G7 countries reached a consensus in principle. The U.S. Treasury Secretary, Janet Yellen, under the Biden administration, expressed strong support for taxing the windfall proceeds derived from these immobilized assets.
Belgium’s independent action demonstrates its commitment to helping Ukraine. In May, Belgium had already taken a significant step by announcing its plan to use the 92 million euros it had received in taxes. Now, the country is taking a bolder approach by allocating a larger portion of tax revenue generated from these assets.
“We only needed EU approval to use the interest. We are simply applying the Belgian tax code, which falls under our competence,” a spokesperson for Prime Minister Alexander De Croo stated, underlining the nation’s commitment to supporting Ukraine in the absence of broader international consensus.
Belgium expects to gather 625 million euros from tax revenues in 2023 linked to frozen Russian assets, with an estimated 1.7 billion euros anticipated for 2024. This sizable financial support is intended to have a direct and positive impact on Ukraine’s reconstruction efforts.
Prime Minister Alexander De Croo emphasized the clear purpose of this initiative, stating, “Last year, it was very clear to us that the taxation on the proceeds of those assets should go 100% to the Ukrainian population. That fund will be used for buying military equipment. We will do that in consultation; as well, it will be used for humanitarian support.”
These funds are anticipated to play a pivotal role in not only bolstering Ukraine’s military capabilities but also in providing much-needed humanitarian assistance. The allocation of these funds directly aligns with Belgium’s prior commitment to ensuring that the tax proceeds from these assets are utilized exclusively for the benefit of the Ukrainian population.
This remarkable development in Belgium reflects the nation’s commitment to contributing to the stability and recovery of Ukraine, serving as a beacon of hope in a region marked by uncertainty and geopolitical complexities. As discussions between the European Union, G7, and other stakeholders continue, Belgium’s proactive approach underscores the importance of international collaboration and creative financial solutions in addressing global challenges.