Cryptocurrency and taxes in the Netherlands
How to deal with cryptocurrency and taxes in the Netherlands?
On this page, we will explain the process of paying taxes on your crypto assets in the Netherlands. The information provided here applies to all cryptocurrencies (i.e. digital currencies).
At the time of writing, Bitcoin and other cryptocurrencies have not been recognised anywhere as legal payment methods. Still, any income obtained in the form of cryptocurrencies has to be reported to the tax authorities. The same applies when you are in possession of cryptocurrencies. In the section below, we will explain which taxes you may have to consider when filing your return.
The Dutch Tax and Customs Administration will only accept your tax declaration if you can provide a valid and clear overview of your transaction history. Most websites offer an option to save your transaction history and to export it into a format easily accessible for the Tax and Customs Administration. If this is not the case, you can take a screenshot that should include the exchange rate and the date of the transaction. It should also display the value of the cryptocurrencies purchased. Your tax return may be declared invalid (following verification) if you fail to provide such elementary data. To avoid this, SATOS will send an overview of your transaction data to your email address when making a cryptocurrency purchase. “We cannot make it any more fun, but we can make it easier,” as the slogan goes.
Income tax on wages paid out in cryptocurrency (Box 1)
If your wage income is either entirely or partly paid out in crypto, you will have to declare this as income tax, even though cryptocurrencies are not recognised as a legal form of payment in the Netherlands. Payments made in Bitcoin and other cryptocurrencies are considered payments in kind. When declaring this income, you must convert the value of your Bitcoins into euros. You should use the exchange rate applied at the time of receiving. Therefore, it's advisable to keep a close eye on the current exchange rates when considering payout.
Are you actively trading or mining? (Box 1 and 2)
Are you personally trading in cryptocurrencies, and are you unable to influence the outcome of your trading activities? Then Box 1 does not apply for your profits and losses. The situation changes, however, when you are trading professionally or commercially, and when you can affect price movements using your expertise, experience or network. In other words: as long as the outcome of your trading or mining exercises remain uncertain (i.e. when you are merely speculating), the results should not be declared under Box 1 and 2.
The mining of cryptocurrencies should generally also not be filed in Box 1 and 2, due to its speculative nature. After all, it's difficult for you to assess how many coins you will be able to mine. Price movements can also not be accounted for with much certainty. As such, the results of your mining activities do not belong in Box 1 and 2. If you do have such assurance, and if your mining activities are considered more professional, the results will need to be filed under Box 1 and 2. If the latter scenario applies to you, you are allowed to deduct the mining costs. Consider here, for example, transaction costs, depreciation of the necessary equipment, and any incurred utility expenses.
Crypto as investment or as savings (Box 3)
Any cryptocurrency savings, as well as any cryptocurrencies used as investment, need to be filed with the Tax and Customs Administration as part of your capital assets. The good news here is that profits gained from possible rate fluctuations when exchanging crypto to euros (or vice versa) are not considered taxable income. The tax authorities consider this a mere currency exchange; it's not considered a taxable event.
Your taxable capital is, however, subject to the capital gains tax (‘vermogenrendementsheffing’). This is a tax paid on the presumed, notional value of your assets. Your taxable equities consist of:
- the value of your assets minus your debts, as of the 1st of January of the reporting year.
You are allowed to deduct:
- the amount of exempt equity (you can find this amount on the website of the Tax and Customs Administration);
- your debts.
The situation as of 2018:
In 2018, the exempt equity amount (without a tax partner) was set at EUR 30,000. As of the 1st of January, 2018, the first part of your capital will be taxed at 0.36%, whereas the notional return is considered 5.38% for the other part. The higher the value of your assets, the higher its hypothetical return. In the end, you will pay 30% income tax on the total notional return.
Now, you may wonder what's meant with ‘notional return’. The government abides by a presumed, hypothetical, or notional return (‘fictief rendement’) to ease the operations of the Tax and Customs Administration. If your portfolio saw a much higher return than the notional return, you are in luck! On the other hand, if you lose out, it's unfortunate. But this system does make sure that you can easily calculate the amount of tax that you will need to pay.
See a calculation example for 2018 below (after the table):
To further clarify this process, we sketched a sample scenario to see how the calculation proceeds.
Example – 2018: Let’s say that you possessed EUR 150,000 in Bitcoin on the 1st of January, 2018. Let's also assume for convenience that you possess no other savings or capital assets. The first EUR 30,000 is exempt from taxation. Your taxable equity is thus EUR 120,000. In this case, the first and second tax brackets apply. A notional return of 2.017% applies for the first EUR 70,800 of your taxable equity. This comes down to an amount of EUR 1,428.03. The remainder of your taxable equity (EUR 49,200) is taxed at a notional return of — on average — 4.326%. This adds up to EUR 2,128.39. The 30% income tax is then extracted from the valuated capital of EUR 3,556.42 (EUR 1,428.03 + EUR 2,128.39). Therefore, in this scenario, you would end up paying a capital gains tax of EUR 1,066.92 on EUR 150,000 in Bitcoin assets.