“The Ultimate Guide to Kryptoskatt: Understanding the Cryptocurrency Tax System in the Netherlands”

The Netherlands’ Cryptocurrency Tax System – Kryptoskatt

The Netherlands has a unique approach to the taxation of cryptocurrencies. 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.

Crypto Gains Tax

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.

Crypto Losses

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.

1. 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.

2. 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.
• If you receive a gift or donation in the form of cryptocurrency, 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.

Taxed Transactions

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 Belastingdienst 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 on the Belastingdienst website. Once you have access to your DigiD, you can visit the tax authorities’ website and file your taxes online.

Conclusion

The Netherlands has a unique cryptocurrency tax system that is different from most other countries. The tax system in the Netherlands taxes crypto assets even if you don’t dispose of them within a tax year. The Vermogensrendementsheffing is equivalent to the capital gains tax charged in other countries. There are ways to claim some tax deductions and reduce your tax bill. Understanding the tax system and filing your taxes correctly is important to avoid penalties.