Frozen Russian assets generate 625 million euros in extra tax revenue for Belgium

By boosting the profits of Belgium-based financial services company Euroclear, frozen Russian assets will generate 625 million euros in extra tax revenue for Belgium this year. Although Belgium is facing a budget deficit, the extra revenue will be used exclusively to fund aid to Ukraine, writes De Morgen.

Belgium is home to financial services company Euroclear, a key part of the global financial system's infrastructure. Europe's efforts to cut financial ties with Russia following its invasion of Ukraine helped the company to a record year in 2022. Euroclear's balance sheet grew by 99 billion euros to 124 billion euros, with interest on Russian cash alone accounting for 821 million euros.

Euroclear receives interest from banks on frozen Russian assets, which it invests. These investments lead to higher profits, which in turn lead to higher tax revenues for the Belgian government. This would result in an additional 625 million euros in tax revenue for Belgium in 2023, De Morgen writes on Monday.

Post-war reconstruction

Although Belgium is grappling with the question of how to solve its budget deficit, the extra revenue will be used exclusively to finance aid to Ukraine. "We have a very strict rule for this money," prime minister Alexander De Croo told a press conference on Thursday. "This additional income will only be used for Ukraine." 

De Croo also left open the possibility that, in time, not only the profits from the frozen Russian assets but the assets themselves could be used for Ukraine's post-war reconstruction. Initial discussions on this possibility are said to be under way at the European level.

The chances of the West seizing Russian assets are slim, according to economist and Russia expert Koen Schoors of UGent. "It would be a big step, which will depend on the course of the war, possible peace negotiations and whether Vladimir Putin's regime will remain in place," Schoors told De Morgen. "In any case, if we go ahead with expropriations, we can expect a counter-reaction from Russia. European and Belgian companies still doing business in Russia, often semi-forced, could be nationalised."

^{© Kirill KUDRYAVTSEV / AFP}