
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
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
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.
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.
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.
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.
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.
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%.
The following crypto transactions are tax-free in the Netherlands:
Here’s a list of some taxed transactions:
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.
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.
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.
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, 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.
According to the official website of the Belastingdienst, you should maintain the following records:
Personal details
Income (worldwide)
Property
If you are considered a ‘non-resident taxpayer:
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:
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:
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)
Airdrops
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.
Forks
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).
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.
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.
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.
The tax rate for capital gains on cryptocurrencies in the Netherlands ranges from 9.7% to 49.5%, depending on your total income.