As the world continues its march into the digital age, cryptocurrency is getting more and more popular. Some countries such as Japan, Germany, Malta or Estonia have even recognized Bitcoin and other cryptocurrencies as legal tender or accepted that companies pay (part) of their employee’s salary with cryptocurrency.
Such payments can indeed be interesting for employees for long-term investments and the diversification of their assets.
What is the situation in Belgium?
The Remuneration Protection Act of 1965 imposes that all salaries be paid in a currency that is legal tender in Belgium. Cryptocurrency is however not recognized as such in Belgium. Salaries can therefore only be paid in Euros. This does not only applies to the fixed salary or part of it, but also to bonuses, premiums or other commissions.
A recent judgment from the Antwerp Labor Court confirms the above.
Facts of the case on cryptocurrency payment
An employee was hired as a recruiter with a company active in selection, outplacement, and recruitment of personnel. Both parties agreed on a specific commissions scheme. Discussions arose following the dismissal of the employee on the payment of those commissions.
While there was proof the employee acknowledged the payment of his commission, it gave rise to discussion, since it was paid in Bitcoin. The employee indeed claimed the commission needed to be considered as unpaid, as the aforementioned Remuneration Protection Act provides that all remuneration must be paid in a currency that is legal tender in Belgium.
Decision from the Labor Court
The Court follows the interpretation of the employee:
- The Remuneration Protection Act is crystal clear: all payments must occur in Euros. A payment in another currency, such as Bitcoin, must be considered as unpaid;
- The acknowledgement of the employee that he received the payment cannot be taken into account as the Remuneration Protection Act is of public order. The Court refers to established case-law according to which an out-of-court avowal cannot apply to legislation of public order;
- The employer did not submit any proof of payment and the payment was nowhere to be found on the pay slips and individual account of the employee, which constitutes an indication that the employer did not deduct the mandatory withholding tax and social security contribution from the payment in Bitcoin.
Importance of the decision
Until the Belgian Legislator explicitly allows the payment of salary in cryptocurrencies, the employer faces the risk that such a payment will be considered as null and void, meaning that the employer could be forced to proceed with a second payment in cash, even if the employee recognizes he received a payment in cryptocurrency.
A payment of the remuneration in cryptocurrency will also give rise to another issue: how will the withholding tax and the social security contributions be calculated since such payment will not occur through a “classic” bank transfer? At the moment of payment or at the moment the employee sells its cryptocurrency? If such payments are ever allowed, the Belgian tax and social security laws will need to address these interesting questions.
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