The market is ahead of legislation and tax legislation. This means that, if you are working with innovative things such as cryptocurrency and blockchain, you should pay close attention to what you can do best with the tax return of what you have done. The tax authorities have put more information regarding the tax aspects of cryptocurrency on the website in the last year.
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The tax authorities describe the cryptocurrency as follows:
Cryptocurrencies (such as bitcoins) Cryptocurrencies are digital means of exchange that do not involve an (official) central counterparty such as a bank. Most transactions in cryptocurrencies take place via so-called exchange platforms. There you can purchase cryptocurrencies or exchange them for other cryptocurrencies against payment of regular money. You can also acquire cryptocurrencies through mining.
In addition, the tax authorities describe the tax treatment for the following situations:
How you must declare cryptocurrencies depends on your situation.
Choose your situation:
Private person
- I am a private person and own cryptocurrencies (*Only investment only)
- I am a private individual and I mine cryptocurrencies or trade in cryptocurrencies (*extra work: ATTENTION)
- I am a private individual and I receive my salary in cryptocurrencies (*employee)
Entrepreneur EZ or VOF
- I am an entrepreneur for income tax and I am paid in crypto currency
- I am an entrepreneur for sales tax and I am paid in crypto currency
Entrepreneur with a BV
- My BV is paid in crypto currency
- My BV mints and trades in crypto currency
In deze notitie geven wij per situatie een nadere toelichting op en geven we een inzicht in de behandeling van de cryptocurrency in uw aangifte BTW (Privé en Vennootschap), aangifte inkomstenbelasting (Privé) en aangifte vennootschapsbelasting (Vennootschap).
Uiteraard kunnen we u alleen informeren over de stand van zaken op dit moment en adviseren wij u de verwerking af te stemmen met de fiscus en/of uw adviseur c.q. fiscalist.
Bij internationale zaken adviseren wij u dit zeker ook af te stemmen omdat de fiscale afhandeling in landen kan verschillen.
Cryptocurrency in income and corporate tax in the Netherlands
The inclusion of bitcoins as well as other forms of cryptocurrency in the tax return can be done in three ways, namely:
1. Individual – Declaring cryptocurrencies as assets in box 3
Initially, it is important to take into account that cryptocurrencies are seen as a certain form of wealth. This ensures that they must be declared in box 3 of the tax return. The value to be reported here is January 1 of the fiscal year in question. Specifically for cryptocurrencies, it is recommended by the tax authorities to state all amounts. This is not least because the value of even a small amount can increase considerably in one year’s time and unfortunately also decrease. Wasn’t a report filed at an earlier time? In that case, it is possible that you will later be confronted by the tax authorities with an unexplained increase in your personal assets.
Note: Declaration in Box 3 does not apply if your private individual does so-called ”extra work” with regard to cryptocurrency.
The tax authorities describe this as follows:
“That is different if you often earn extra income with extra work, ie on top of your investment activities. In that case, you must declare the income. Do you declare this income as income from other work or as profit from a business?”
This means that you are in fact seen as a ”kind” entrepreneur and must declare the income as income from other work or as an entrepreneur as ”profit? from company” in Box 1, with a higher tax rate (see the overview at the bottom of this article) The ”mining” of coins and ”trading a lot” is in fact seen by the tax authorities as extra work. It is not yet entirely clear what a lot of trading entails. If in doubt, we advise you to discuss this with a tax specialist and/or to have your tax return completed by a tax specialist. If you receive cryptocurrency from your employer as a private individual, then according to the tax authorities there is income in kind and you must convert the crypto into euros.
2. Entrepreneur – Declaring cryptocurrencies as income in box 1
If you, as an entrepreneur, are engaged in trading Cryptocurrency, you must declare the profits in Box 1. This also applies to activities such as ”mining”, ”masternodes” etc. This means that an income tax return must be made as an entrepreneur. In this case, we advise you to ask a tax specialist for advice and/or support. However, if you are an entrepreneur, who has a company outside the financial sector and you make private investments in Cryptocurrency, then the rules apply to the income tax return as stated above for private individuals.
3. Entrepreneur with a BV – Declaring cryptocurrency as income in a company
If you make the investments in a BV, the results fall into this company and corporate tax is due on the results you have achieved. This also applies to activities such as ”mining”, ”masternodes”, etc. These must be stated in the annual figures of the company and declared in the corporate income tax return. It is important to apply the profit-taking rules (realization principle and prudence principle). This means taking profits when they are realized (sale) and taking losses when they are. We advise you to ask a tax specialist and/or accountant for advice. If you receive or pay for cryptocurrency, these must be converted at the Euro value in your financial administration
Peildatum BOX 3:
De zogenaamde peildatum is 1 januari van het aangiftejaar. Onder box 3 vallen vormen van inkomen zoals beleggingen en spaargeld. Voor de duidelijkheid; dit betekent dat de waarde van de cryotocurrency per 1-1-2020 moet worden aangeven in de aangifte inkomstenbelasting 2020 en de waarde per 1-1-2021 in de aangifte inkomstenbelasting 2021, onder de post overige bezittingen. Bewaar de specificatie c.q. onderbouwing goed zodat je de fiscus nader kunt informeren indien dit (laren later) nodig zou zijn.
How much income tax do you have to pay for 2019 in box 3?
Tax-free capital € 30,360; with (tax) partner € 60,720.
Above that, Box3 capital is taxed with:
Up to and including 71,650 euros you pay 0.5793 percent (1.931% times 30%) tax Above 71,651 up to and including 989,736 euros you pay 1.3329 percent (4.443% times 30%) Above 998,736 you pay 1.677 percent (5.59% times 30%) Read more about the tax on box 3 in 2019 here.
How much tax do you have to pay in box 3 for 2020?
Tax-free capital € 30,846; with (tax) partner € 61,692.
Above that, Box 3 capital is taxed with:
Up to and including 72798 euros you pay 0.5367 percent (1.789% times 30%) tax Above 72,798 up to and including 1.005,573 euros you pay 1.255 percent (4.185% times 30% ) 1.005.573 you pay 1.584 percent (5.28% times 30%) Read more below about the tax on box 3 in 2020.
How much tax do you have to pay for 2021 in box 3?
Tax-free capital € 50,000; with (tax) partner € 100,000.
Above that, capital is taxed with:
Up to and including 50,000 euros you pay 0.58838 percent (1.898% times 31%) tax
Above 50,000 to 950,000 euros you pay 1.39531 percent (4.501% times 31%)
Above 950,000 pay your 1.7639 percent (5.69% times 31%)
Read more below about the tax on box 3 in 2021.
Still, most people don’t have to worry about “huge” amounts of tax to pay. You do not have to pay tax on your cryptocurrency this year if your assets are less than 30,000 euros (€30,846 in 2020, €50,000 in 2021) and 60,000 euros in 2019 (€61,692 in 2020 and €100,000 in 2021) if you are married or cohabits.
How much income tax you pay in Box 1
In Box 1, the tax depends on the level of your income in Box 1. Because it is taxed progressively, the rate in 2019 can rise to 51.75% (49.5% in 2020 and 2021) of your income.
People who want to avoid the tax authorities should consider the possible consequences. If you get ‘caught’, you have to pay a hefty fine. “There are several examples of people who have run into the lamp. When you sell your bitcoins or other cryptocurrencies, you suddenly get a sum of money. It is therefore quite possible that the tax authorities will knock on your door to ask why your assets have increased so suddenly”.
It is therefore wise to properly file a tax return and if you have any questions or are unclear, and to contact a tax specialist.
Cryptocurrency in the VAT return in the Netherlands
Until now, no VAT has been required in Europe on the purchase and sale of these virtual currencies such as bitcoins or other cryptocurrencies.
The Court of Justice of the EU has ruled in a statement that bitcoins, like other cryptocurrencies, serve no other purpose than to make payments. That is why the obligation has been imposed on the Member States not to levy VAT. There would be no added value from a tax point of view. In any case, you do not have to take into account the fact that VAT is charged or charged when buying and selling.
Hopefully we have been able to inform you sufficiently about the tax aspects of cryptocurrency. If you still have more questions or if something is not yet clear to you, we advise you to ask for advice from a tax specialist or accountant.