Are you a crypto investor with no idea how crypto taxes work in the US? Well here’s exactly what you need to clear your doubts, a comprehensive tax guide on how crypto taxes work in the US.
If you are deep into the crypto territory and have no idea how they’re taxed, you’re not alone. Thousands of residents struggle to understand the tax obligations these transactions entail and find themselves in the middle of tax complications and legal troubles.
That’s why we decided to put together the most comprehensive crypto tax guide for Netherlands residents, to help them get acquainted with the crypto tax infrastructure. We’ve also touched upon how you can file your crypto taxes conveniently, and the records you need to keep to be able to report these transactions conveniently.
The Dutch tax authorities are yet to discuss the taxation of some crypto applications like De-Fi. However, we assure you we will be among the first ones to update this guide and accommodate any new guidelines issued by the authorities in the forthcoming days.
So with that in mind, let’s get started…
Crypto Gains Tax
Unlike most countries where the disposal of crypto assets is considered a taxable event, the Netherlands has an inclusive tax rule that mandates taxation of your crypto assets even if you don’t dispose of them within a tax year.
The Belastingdienst mandates every resident to report the value of their assets on January 1st of every year where your assets inherit the cost basis equal to the market value of the assets on that day and it resets exactly a year later.
The tax authorities use the cost basis to calculate the presumed gains on the asset over a financial year and you have to pay taxes on these gains regardless of whether you dispose of the assets or hold on to them.
Taxes in the Netherlands are divided into three categories, and each category has an independent tax rate.
Income from employment
- Significant interest income from any source
- Gains derived from assets, investments, or savings
Crypto happens to be in the third category, and the tax levied on Box 3 gains is called the Vermogensrendementsheffing, and it’s equivalent to the capital gains tax charged in other countries.
Note that sometimes you might need to report some crypto transactions in Box 1 Some of the instances include:
If you’re day trading
- If you’ve internal information on trades and are profiting from it
- If you’re mining crypto as a business.
Capital Gains Tax Rate
As mentioned earlier, there’s no dedicated tax for capital gains in the Netherlands. Any gains incurred from crypto assets are grouped as Box 3 gains by the tax authorities and are subjected to a flat tax rate of 31% regardless of income level.
Since the Belastingienst doesn't tax the actual gains, but the presumed gains on assets, any losses incurred as a result of disposal don’t have any effect on your tax bill in the Netherlands.
Since buying and selling crypto are non-taxable transactions in the Netherlands, there are no profits to offset your losses against. Therefore, any capital losses incurred in the Netherlands are simply losses and you can neither write them off against them again nor carry them forward to the subsequent tax year.
Lost or Stolen Crypto
There are provisions in the dutch crypto tax guidelines that allow you to use your lost or stolen crypto as a tax-deductible and reduce your tax bill. However, you need the right documents to prove your loss of possession and the negligible chance of recovery of these assets.
Crypto Tax Deductions Netherlands
Although there’s no (legal)way to avoid paying taxes entirely in the Netherlands, there are ways you can claim some tax deductions and reduce your tax bill.
- Gift Crypto
You can gift up to €3,244 worth of crypto tax-free in the Netherlands and the amount doubles to €6,604 if you gift the assets to your children. You can use this as a tax-deductible, by gifting crypto to your spouse or your children in a tax year.
- Donate Crypto
When contributing to a public benefits organization (ANBI), philanthropic individuals have the opportunity to lower their taxable income by subtracting the value of their donations. It's important to note that donations below 10% of your annual taxable income are exempt from taxes.
How to Calculate Crypto Income
Since capital gains and losses are irrelevant in the Netherlands, you should shift your focus from cost-basis calculations to presumed gains calculations, because that’s what you’ll be taxed on.
Your presumed gains are calculated based on a predetermined rate corresponding to the total value of your assets. Your assets inherit the cost basis at the beginning of the tax year which is equal to the fair market value of your assets on that day.
The presumed gains calculations consider that the greater the total value of assets held by a person, the greater the overall gain on the assets. Therefore, a progressive tax rate is employed ranging from 0.01% to 5.69%.
Tax-Free Crypto Transactions
The following crypto transactions are tax-free in the Netherlands:
- If you use one cryptocurrency to purchase another, this transaction is generally not subject to taxation.
- Suppose you receive a gift or donation in the form of cryptocurrency. In that case, this transaction is tax-free as long as the value of the gift or grant is less than the annual gift tax exemption amount of €6,604, which goes up to €6,604 if the person gifting you the assets happens to be your parents.
- If you mine cryptocurrency as a hobby, any profits you make from this activity are non-taxable
- Buying and selling crypto is non-taxable in the Netherlands since capital gains tax is not applicable in the Netherlands.
Here’s a list of some taxed transactions:
- Donating crypto to an unregistered charity
- Buying and holding crypto
- Mining crypto as a hobby
How to File Crypto Taxes in the Netherlands
You can file crypto taxes in the Netherlands through the online portal after you have filled out your tax form which is available on the Belastingdiest website. You are required to file your tax returns before the May 1 deadline. However, you can extend the deadline to accommodate some unforeseen circumstances.
You can file your crypto taxes yourself, through a third-party intermediary like a tax accountant, or using a crypto tax software like Kryptoskatt which is capable of generating legal complaint tax reports in a matter of minutes without you having to lift a finger. Regardless of how you file your taxes, you need your DigiD to prove your identity to the tax authorities.
If you don’t have one, you can apply for it here.
Once you have access to your DigiD, you can visit the tax authorities' website and download your electronic tax return report.
Here’s an overview of all the information you need to file your taxes online in the Netherlands.
Tax on Mining Crypto in the Netherlands
The taxability of mining as a source of income is contingent on whether it constitutes a business activity. In the absence of such, the gains from mining are classified as assets that are included in Box 3's asset base. However, if it can be anticipated that the mining activities will yield profit in the long term, it is typically considered as income derived from other sources and falls under the purview of Box 1 taxation.
NFT Taxes Netherlands
The taxes around NFTs depend on the underlying asset of the NFT, generally, all the assets are to be reported as box 3 assets, although there’s an exception in the case of art pieces. However, you might need to report your NFT art pieces under box 1 of your tax report if you happen to be an art dealer.
As a business, any earnings made from the production, sale, or swap of NFTs are automatically included in the tax profit calculations and are subjected to a tax rate of 15% for profits up to €395,000 and a flat rate of 25.8% above that.
NFTs and VAT
Regarding NFTs, there aren't any clear rules about handling Value-Added Tax (VAT). Because it's unclear what kind of thing an NFT is, it's hard to know how it should be taxed. Unlike cryptocurrencies, it's possible that buying or selling NFTs might not be considered exempt from VAT. And even though you're buying something when you get an NFT, it might not be considered a regular purchase of goods.
De-Fi Crypto Taxes in the Netherlands
De-Fi, being a fairly new financial application of crypto assets hasn’t been touched upon by the Dutch tax authorities. However, it doesn’t imply in any way that the income made from De-Fi transactions won’t attract any taxes in the Netherlands.
If you’re making a significant amount of gains using De-Fi protocols, you should consider contacting a Dutch tax consultant and understanding the liabilities that entail these De-Fi transactions.
Based on the existing crypto taxation guidelines, it may be inferred that most De-Fi transactions may be considered Box 1 assets and may be subjected to income tax in the Netherlands. If you’ve been involved in the following De-Fi transactions, you should consider reporting them to the Belastingdienst.
- Yield farming on crypto lending platforms like Aave
- If you’ve earned liquidity tokens or governance tokens on De-Fi platforms
- If you’re earning recurring interest on crypto assets you’ve lent
- If you’ve earned crypto as dividends from platforms like CoinRabbit
What crypto records will the Belastingdienst want?
According to the official website of the Belastingdienst, you should maintain the following records:
- Your citizen service number (burgerservicenummer, bsn), if applicable, those of your partner and children
- Your bank account details (IBAN, preferably a Dutch bank account)
- Your DigiD or – if you do not have one - your username/password combination or an EU-approved login key
- Your telephone number
- Your home address details
- Your annual income statements for 2022
- If you do not have any income statements: your payslips.
- In the case of wages received from Belgium: all payslips
- Spousal maintenance payments received
- Bank account details (Dutch and foreign bank accounts)
- Your current account annual statement for 2022
- Your savings account annual statement for 2022, as well as the annual report of the savings accounts of your children under 18 years of age
- Your investment account annual statement 2022
If you are considered a ‘non-resident taxpayer:
- Your own home’s WOZ value on 1 January 2021
- You’ll find this value on last year’s municipal WOZ assessment.
- Your mortgage’s annual statement for 2022
- In case of purchase or sale of your house: the final settlement from your notary
If you are considered a ‘qualifying non-resident taxpayer’ or if you are covered by Dutch social insurance, you will also need your foreign home’s details:
- The value of your foreign home
- Your foreign home’s mortgage annual statement 2022
Deductions (only if you are a ‘qualifying non-resident taxpayer’, or if you were living in Belgium, Surinam or Aruba, or if you were covered by Dutch social insurance)
You will need proof of payment. For instance:
- Costs for care which were not covered
- Your own Healthcare Insurance Act contribution. Non-deductible items are private care insurance premiums and any deductible excess.
- Paid partner alimony
- Costs for study, in case you were not entitled to any study loans or grants
Other (only if you are a ‘qualifying non-resident taxpayer’, or if you were living in Belgium, Surinam or Aruba, or if you were covered by Dutch social insurance)
- Details of grants or loans for study costs
- Details of other loans or debts
- Details of paid premiums for annuities
- Overview of paid premiums for occupational disability insurance
- Details of dividend
How are Airdrops and Forks Taxed in the Netherlands?
Unless you’re a trader, any tokens received as a result of airdrops will be treated as Box 3 assets by the tax authorities and will be taxed accordingly. For corporates, tokens received are subject to corporate income tax that depends on the market value of the assets upon receipt.
Since soft forks don’t result in any additional tokens, they’re considered non-taxable by the Dutch tax authorities. However, hard forks are a different story. Any additional tokens received after a hard fork must be reported as a Box 3 asset in the tax form and will attract income tax unless you’re a trader(Any income made as a trader is reported under Box 1 of the tax form).
Frequently Asked Questions(FAQs)
- Can the Belastingdienst Track Crypto Transactions?
Yes, the Belastingdienst (the Dutch Tax and Customs Administration) can track crypto transactions, just like any other financial transaction. While the transactions themselves are recorded on a decentralized ledger, the identities of the individuals involved in the transactions can be traced through the use of blockchain analysis tools, especially if the person has used an exchange or another centralized service to buy or sell cryptocurrencies.
- Is crypto legal in the Netherlands?
Yes, owning, buying, and selling cryptocurrencies is legal in the Netherlands. The Dutch government has been relatively open to new financial technologies, including cryptocurrencies and blockchain.
The legal status of cryptocurrencies in the Netherlands is that they are not recognized as legal tender, but they are considered assets. Therefore, any gains or losses from buying, selling or exchanging cryptocurrencies are subject to taxes.
- Is crypto taxable in the Netherlands?
Crypto transactions are taxable in the Netherlands and the Dutch tax authority-the Belastingienst has made it pretty clear that any transactions involving cryptocurrencies even the ones where you just hold your assets and don’t dispose of them, will attract tax liabilities in the Netherlands.
- What is the tax rate for capital gains on cryptocurrencies in the Netherlands?
The tax rate for capital gains on cryptocurrencies in the Netherlands ranges from 9.7% to 49.5%, depending on your total income.