It’s that time again: the tax return for 2020 must be done. What about if, in addition to savings and possible investments, you also had crypto coins in 2020? In this article, we answer 7 questions you may have about bitcoin and other cryptocurrencies in conjunction with the tax return.
You have probably already had the blue envelope from the Tax Authorities on the mat. From 1 March it is time to file the tax return again. Now that bitcoin (and other cryptocurrencies) have made a comeback in 2020 and many people have invested in the digital coins, it is good to think about this during your tax return. Bitcoin and tax return: questions and answers
Because how do you declare your assets in bitcoin and other cryptocurrencies in the 2020 tax return? And what happens if you don’t declare your crypto coins?1. Where do you declare your cryptocurrency in the tax return?
Your cryptocurrencies belong to box 3 (your assets that you have built up by saving and investing) of the income tax. You indicate your cryptocurrency under the category ‘other assets’.2. Do you always have to pay tax on your assets in bitcoin?
You do not always pay tax on your own capital. In 2020, this limit will be 30,846 euros. This means that you do not have to pay tax if you have less than 30,846 euros in assets on 1 January 2020. Please note: we are not only talking about your assets in bitcoin and other cryptocurrencies. Your savings and other investments are also covered by equity.3. How much tax do you have to pay on your assets?
Exactly how much tax you pay depends on your total assets. With a capital up to 100,000 euros, you pay a rate of 0.54 percent. This eventually rises to 1.58 percent with a capital of more than 1 million.4. How do you know what your assets are when the value of cryptocurrency is volatile and never the same?
If you file a tax return for the year 2020, it concerns your assets on 1 January 2020 and therefore also the price on that date. It is therefore best to request from your brokers the value that your bitcoin or other crypto coins had on this day.
Tip: from now on, make a print screen of the race on 1 January. This is not only nice if you start working on your tax return again in March. The tax authorities can always ask for a substantiation of the value that you have entered.5. What about if you purchased bitcoin after January 1st?
If you did not have bitcoin on January 1, 2020, the crypto coins that you purchased later in 2020 will not count in your declaration for 2020. Then you only indicate in the declaration for 2021 how much capital you had on January 1, 2021 in bitcoin and other crypto.6. How does the tax authorities know how many crypto coins you have?
Banks report every year to the tax authorities how much money you have in your savings accounts, investment accounts and checking accounts. These are therefore often pre-filled. It is then a matter of checking.
Cryptocurrencies are of course digital means of exchange where no (official) central party such as a bank is involved. It may be tempting not to declare your assets in cryptocurrencies. First, you are in violation. Secondly, active crypto exchanges in the Netherlands are obliged by new legislation to verify customer data. The Tax and Customs Administration can therefore request from providers with a Dutch license how much crypto possession you have.7. What happens if you don’t declare your bitcoin on your tax return?
If you do not declare your assets in bitcoin and other cryptocurrencies in the tax return and the tax authorities find out, the consequences are great. The tax authorities can impose a fine of up to 300 percent of the tax that you were supposed to pay (and which you logically still have to pay). Not only that: it may just be that the tax authorities decide to prosecute you criminally.
The Tax and Customs Administration can still knock on the door up to five years after the declaration to seek redress. Although the Tax and Customs Administration may not yet actively check whether people are withholding bitcoin and other cryptocurrencies, that could of course be a completely different story in five years’ time. The increase in value is currently attracting a lot of attention in the media and politics.
9 tips for the tax return so that you do not leave money behind
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Bitcoin and Tax Return: 7 Important Questions and Answers
