III.1. Tax consequences at the time of the conclusion of the convertible loan
III.1.1. VAT
6. On the part of X, the conclusion of the convertible loan and the consequent release of the funds are transactions which fall outside the scope of VAT and which do not render the tax payable.
III.2. Tax consequences in the event of repayment of the capital (1/10th of the amount lent) and payment of interest
III.2.1. VAT
8. Reimbursement of capital to fund lenders is an operation which falls outside the scope of VAT and does not render VAT payable.
9. Where the lenders of funds are not liable for VAT, the payment of interest to these lenders of funds does not constitute consideration for a transaction which falls within the scope of the VAT. On the other hand, when the lenders of funds are taxable persons within the meaning of Article 4 of the CTVA, the payment of interest to these lenders of funds constitutes consideration for a credit transaction carried out by these lenders of funds but which is exempt from the tax by article 44, § 3, 5°, of the CTVA. In any case, the payment of interest does not make any tax payable.
III.3. Tax implications of converting return of principal and payment of interest into remittance of proceeds
III.3.1. VAT
12. Crowdfunding in exchange for an in-kind reward, whereby a person makes a financial contribution to a crowdfunding campaign (contributor) and receives in return a non-financial reward in the form of goods or services provided by the person who receives this contribution as part of this crowdfunding campaign (project leader), constitutes a taxable transaction for VAT purposes, provided that there is a direct link between the supply of goods or the provision of services and the corresponding consideration collected through crowdfunding and that the project leader is a taxable person acting as such. In such a case,
13. In the present case, the crowdfunding envisaged constitutes a hybrid form of financing since it is initially a 10-year loan which in principle provides for a financial reward (reimbursement of 1/10th of the loaned capital and interest each year) but this financial reward can, each year, at the total discretion of the lender and subject to compliance with a series of conditions (see n° 4 above), be converted into a reward in kind which consists mainly of the delivery of a certain number of products but also the allocation of other benefits (discounts on subsequent purchases, participation in activities, etc.; see No. 4.4. above).
14. In the event that the lender chooses the conversion and respects the conditions, the sum formed by the repayment of 1/10th of the loaned capital and accrued interest for one year must be analyzed as the consideration for a transaction consisting of the delivery of products and the granting of other benefits. The tax base for this operation is the sum formed by the repayment of 1/10th of the loaned capital and accrued interest for one year, in accordance with article 26 of the CTVA.
15. Moreover, the tax on this transaction becomes payable at the time of the conversion, in accordance with Article 17, § 1 , paragraph 3, or § 3, of the CTVA since at that time, X is already in possession of the payment for this transaction. In other words, the time when, in particular, the products will be made available to contributors who have chosen the conversion will remain without influence on the payment of the tax.
16. Finally, it is specified that the fact that the annual rate of conversion of interest-bearing loans into benefits in kind cannot exceed 80% of all the amounts lent is an essential condition of this decision. Indeed, this condition imposed by the SDA rules out the possibility that all participants will systematically convert the sums due to them into benefits in kind if the conversion conditions were to be too favorable to them.
Preliminary decision no. 2021.1166
Source: fgov.be
