This article is part of TokenTax's Cryptocurrency Tax Guide.
Overview of Dutch crypto taxation
The Dutch tax authority, the Belastingdienst, has released regulations on how they tax cryptocurrency in the Netherlands, although there are some grey areas for which you need to follow relevant case law.
The Dutch government guidance includes implications for trading and mining activities based on your year-end holdings as of January 1st. While the deadline is May 1st, you can file for an extension if you need more time to reconcile your cryptocurrency transactions.
Crypto for individuals investing speculatively is taxed as property
Cryptocurrency trading and mining is typically treated as property and taxed as capital gains in the Netherlands. Unlike other countries that tax crypto as property, however, the cost basis can only be carried back to January 1st of the given tax year, and it resets again each tax year on January 1st.
This means you have tax on gains or losses based on the change in value over the year.
If you buy crypto during the tax year, you are taxed on any gains it makes between the time of acquisition and at the end of the tax year (on January 1st).
If you hold crypto through the tax year, you are taxed on any gains it makes from beginning of the year to the end of the year.
Reporting and paying cryptocurrency taxes in the Netherlands
All capital gains and losses are reported in Box 3 of your Dutch tax return. Your tax brackets for capital gains on property are determined by your net gain minus losses from the current tax year only.
Once you have calculated these net capital gains, you can then determine your tax rates using the below table for 2020 tax brackets. It is important to note that these are cumulative brackets, so if you earned over the maximum bracket threshold, you have to calculate each bracket range separately: calculate the portion in the lowest bracket plus the portion in the middle bracket plus the portion in the highest bracket to get your total amount reported.
2020 property tax brackets in the Netherlands
|Portion of capital gains in bracket range||Percent taxed at 0.06% savings rate||Percent taxed at 5.33% investment rate|
|€72,797 to €1,005,572||21%||79%|
After you calculate the tax bracket rates, the total sum is reported in Box 3 of your tax return. This amount is what is subject to a 30% tax rate, commonly referred to as the Dutch 30% rule.
Business considerations for cryptocurrency tax treatment in the Netherlands
There are separate tax rules if your activity is considered a business. In this case, your cryptocurrency gains would be taxed as income, as you might expect as a mining or investment firm. However, the tests to qualify as a business activity are strict, and you should consult with a tax attorney on the Dutch laws established by historical cases.
Most of the case law establishes that you need to both intend to achieve profit and reasonably expect to turn a profit from your business activity for your profits to be taxed as income. Income taxes in this situation would need to be reported in Box 1 of your Dutch taxes and subject to your total income tax bracket rates.