Belgium plans to use tax on frozen Russian assets to help Ukraine

Belgium is expecting to collect 2.3 billion euros ($2.4 billion) in taxes it will get on frozen Russian asset, to use in reconstructing Ukraine. Group of Seven (G7) countries along with the European Union (EU) have been discussing if they could use the interest incurred on over 300 billion euros of immobilised Russian public money to fund Ukraine.

Over 200 billion frozen assets have been held in Europe and 125 billion of them are managed by Belgian clearing house Euroclear.

The European Commission said in July that it would put forth a proposal on whether these funds could legally be used after in-principle nod from G7. Unites States Treasury Secretary Janet Yellen on Wednesday said that the Biden administration was supporting taxing windfall proceeds from these assets.

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Belgium has gone ahead on its own and has decided using the tax paid on the interest. It has said previously in May that it would use 92 million euros it had already received in taxes.

"We only needed EU approval to use the interest. We are simply applying the Belgian tax code, which is our competence," a spokesperson for Prime Minister Alexander De Croo said.

It is expected that Belgium will collect 625 million euros from 2023 tax revenues on frozen Russian assets. It is estimated that it will collect 1.7 billion euros in 2024.

"Last year, it was very clear to us that the taxation on the proceeds of those assets should go 100% to the Ukrainian population," De Croo told reporters earlier on Wednesday.

"That fund will be used for buying military equipment. We will do that in consultation; as well it will be used for humanitarian support."

Although frozen Russian assets are a problem for Russia, there are jitters on the Ukrainian side as well as fresh fears have arisen over certainty of continued US support.

Russia invaded Ukraine in February last year. The Western countries led by the US have poured in billions of dollars in humanitarian and military aid to Ukraine. But there are voices in US political circles that are expressing that US help to Ukraine can't go on forever. President Joe Biden, however, has sought to assert that the US was serious about continued support to Ukraine.

(With inputs from agencies)

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