Eyes are watching the EU at the moment in the light of the case brought by Swedish authorities regarding VAT on virtual currencies.

David Hedqvist, who had wanted to sell Bitcoin through his website, is in the middle of a challenge by the Swedish tax authorities on an earlier ruling.

Now Reddit user /u/beglcoin has said that the Belgium tax authorities have sent a letter to Belgacoin stating that Bitcoin exchange operations are VAT-exempt.

This falls in line with the UK's HMRC brief last March where in the purchase of crypto-currencies, no VAT would be due on the coins themselves.

However, we still need to be cautious in case the EU decides that Bitcoin trading is a service and therefore should not be VAT-exempt. This would definitely be a bad news for any EU-based exchanges, moreso if the UK and Belgium are required to change their positions in order that the rules are consistent across Europe.