Crypto Tax Planning in the Netherlands: Best Practices 2024

The Netherlands is a growing crypto market, with an estimated 5% of Dutch people, or 700,000 people, have already invested in Bitcoin. But not a lot of people understand the taxes associated with crypto and end up paying all their hard earned gains on taxes. 

Understanding the tax implications of your crypto holdings is crucial for a seamless financial journey. 

In this guide, we'll delve into 11 best practices for crypto tax planning in the Netherlands based on the latest information available.

1. Understanding the Dutch Tax System for Crypto

In the Netherlands, crypto-assets are treated as taxable assets, falling under the purview of the Dutch Tax and Customs Administration, known as Belastingdienst. Unlike some countries, where taxes are directly applied to gains from selling or exchanging cryptocurrencies, the Dutch system takes a unique approach.

Key Points:

• Box 1 and Box 3 Declaration: Crypto holdings are reported in two main boxes – Box 1 for income from activities like mining and Box 3 for the presumed increase in value.

• Taxation Period: The tax year in the Netherlands runs from January 1st to December 31st. The deadline for tax declaration is May 1st of the following year.

• Tax Rates: Box 1 is subject to personal income tax rates ranging from 36.97% to 49.5%. Box 3, covering savings and investments, has progressive fictitious returns taxed at 32%.

Learn more about Netherlands crypto tax in our Netherlands Crypto Tax Investor's Guide

2. Crypto Taxable Events in the Netherlands

Understanding what triggers taxable events is absolutely necessary for accurate tax reporting. In the Netherlands, several scenarios may require specific attention:

Taxable Events:

• Crypto Income in Box 1: If you receive income in crypto, engage in day trading, mine crypto, or earn rewards from activities like bounties or operating a masternode, these fall under Box 1.
• ‍Box 3 Reporting: For most crypto holders, reporting the value of their assets on January 1st of the tax year under Box 3 is essential.

3. Calculating Your Tax: Navigating Fictitious Gains

Understanding how the Belastingdienst calculates your tax is important. As of January 2023, the system involves categorizing your assets and applying a weighted average yield to determine the taxable benefit. Fictitious gains, a progressive tax system, are being phased out by 2027. An example illustrates how this system works in practice.

4. Taxation of Specific Crypto Activities

Understanding how various crypto activities are taxed is essential for accurate reporting. In the Netherlands, different activities come with their own set of rules:

a) Buying and Holding Crypto:

• Tax on Buying: Purchasing crypto itself is not a taxable event. However, the acquired crypto becomes part of your assets, which must be declared under Box 3.

• Tax on Holding (HODLing): Holding crypto is considered an asset and falls under Box 3 taxation. The value of your holdings on January 1st of the tax year is essential for reporting.

b) Selling Crypto:

No Tax on Selling: Surprisingly, there is no specific tax for selling crypto in the Netherlands. However, any gains realized from the sale contribute to your assets under Box 3.

c) Airdrops and Hardforks:

Uncertain Taxation: As of now, there's no official guidance on the taxation of airdrops and hardforks. The prevailing opinion suggests including them under Box 3, considering them part of your assets.

5. Tax Implications of Staking and Lending

a) Staking:

Box 3 Treatment: Kryptos suggests treating staking as normal asset management falling under Box 3. However, if staking activities go beyond normal management or are part of a professional activity, Box 1 taxation may apply.

b) Lending:

Similar to Staking: Lending rewards are generally treated similarly to staking rewards, falling under Box 3. However, if lending activities extend beyond typical asset management, Box 1 taxation might apply.

6. Mining and Liquidity Mining

a) Mining:

Box 1 Taxation: Mining crypto-assets can fall under Box 1 for personal income tax if it is considered a source of income or part of a professional activity. The profitability of mining activities determines the tax treatment. 

b) Liquidity Mining:

Undefined Taxation: Official statements regarding the taxation of liquidity mining are yet to be published. Kryptos suggests Box 1 taxation, but it might vary based on individual cases.

Check the income tax breakdown here.

7. Tax Treatment of Non-Fungible Tokens (NFTs)

The taxation of Non-Fungible Tokens (NFTs) depends on the underlying asset. Generally falling under Box 3, an exemption exists for NFTs considered works of art. Determining this exemption might require consultation with a tax advisor.

8. Gifts, Inheritance, and Other Special Cases

Understanding the tax implications of gifting or receiving crypto is crucial. While there's a general exemption, exceeding this amount incurs taxation. Additionally, special cases like inheritance may have unique tax considerations.

Tax-Free Thresholds

• Individual Gift: For individual gifts, including crypto, up to €3,244, the transaction is generally tax-free.

• Parental Gifts: If the gift is received from parents, the tax-free threshold is more than doubled, reaching €6,604.

9. Tax Reporting and Documentation Requirements

a) Reporting Crypto Assets:

• Mandatory Declaration: Dutch taxpayers must declare ownership of crypto assets in their Personal Income Tax (PIT) return. Failure to do so can result in fines, with material fines of up to 300% for deliberate failures.

• PIT Return Deadline: The tax year in the Netherlands runs from January 1st to December 31st. Taxpayers have from March 1st to May 1st of the following year to submit their taxes through the online portal MijnBelastingdienst. Missing this deadline could lead to penalties.

b) Documentation:

• Comprehensive Reports: Kryptos being the best crypto tax software of Netherlands provides comprehensive crypto tax reports in PDF format. These reports offer detailed information about balances, transactions, timestamps, amounts, assets, costs, and fees. They serve as proof of origin for interactions with banks or tax advisors.

• Legal Interpretation: Kryptos's reports include clear explanations in terms of legal interpretation. The information is presented in a format suitable for submission to tax authorities.

10. For Effective Crypto Tax Planning

a) Stay Informed:

Dynamic Regulatory Environment: The crypto tax landscape is dynamic. Stay informed about any regulatory changes or official statements from tax authorities that might impact your tax obligations.

b) Consult a Tax Advisor:

Individual Cases Matter: Tax treatment can vary based on individual circumstances. Consult a tax advisor for personalized advice and to ensure compliance with the latest regulations.

c) Regularly Update Records:

Keep Records Updated: Maintain accurate and up-to-date records of all your crypto transactions. This includes purchases, sales, airdrops, staking, and any other activities to facilitate smooth tax reporting.

11. Final Tip Optimize Taxes with Kryptos

a) Choose Your Calculation Method:

Court-Approved Methods: Following a court judgment in 2021, there are two approved methods for calculating Box 3 figures. Kryptos's report provides figures for both methods, allowing users to choose the most favourable one.

b) Don’t Declare Staking and Lending Rewards under Box 1:

User-Friendly Interpretation: While official statements on staking and lending taxation are pending, Kryptos recommends not declaring these rewards under Box 1. This user-friendly approach aims to optimize taxpayers' positions.

How to File Crypto Taxes using Kryptos?

Now that you know how your cryptocurrency transactions are taxed and what paperwork you need to fill out to complete your tax report, here's a step-by-step overview of how kryptos can simplify your tax process:

1. Visit kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method 
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

FAQs

1. What is the tax year in the Netherlands, and when is the deadline for tax declaration?

The tax year in the Netherlands runs from January 1st to December 31st. Taxpayers have until May 1st of the following year to submit their tax declaration.

2. How are crypto assets taxed in the Netherlands, and what are Box 1 and Box 3?

Crypto assets in the Netherlands are treated as taxable assets. They are reported in two main boxes – Box 1 for income from activities like mining and Box 3 for the presumed increase in value. Box 1 covers personal income tax rates, while Box 3 involves savings and investments taxed at 32%.

3. What are the taxable events for crypto in the Netherlands?

Taxable events include receiving crypto income in Box 1, engaging in day trading, mining crypto, and earning rewards from activities like bounties or operating a masternode. For most crypto holders, reporting the value of assets on January 1st under Box 3 is essential.

4. How can I optimize my crypto taxes in the Netherlands?

You can optimize your taxes by choosing the most favorable calculation method for Box 3 figures. Additionally, consider not declaring staking and lending rewards under Box 1, following the user-friendly interpretation provided by platforms like Kryptos

5. What are the tax implications of specific crypto activities, such as buying, holding, and selling?

Buying crypto itself is not a taxable event, but it becomes part of your assets under Box 3. Holding crypto is taxed under Box 3, and there is no specific tax for selling crypto in the Netherlands. Gains realized from the sale contribute to your assets under Box 3.

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All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!