Cryptocurrencies are digital means of exchange that do not involve an (official) central counterparty such as a bank. Most cryptocurrency transactions take place via so-called exchange platforms. There you can purchase cryptocurrency against payment of regular money or exchange it for other cryptocurrencies. You can also acquire cryptocurrencies through ‘mining’. The Tax And Customs Administration writes this on its page: ‘Cryptocurrency (such as bitcoins)’. For example, you can also read more about it on the page: ‘Cryptocurrency, an introduction’ of the Chamber of Commerce. There you will also find an overview with advantages and disadvantages. Cryptocurrencies are not without financial risks. Always seek further advice from your investment advisor. How does the Tax and Customs Administration look at cryptocurrencies?
What about fiscally? It depends on the situation. For example, do you (only) have them in your possession or are you more closely involved?
Cryptocurrencies that you keep private, in principle, belong to box 3 of the income tax. For your income tax return, they are ‘other assets’. You then include them for the fair value on 1 January of the year of the tax return. For your income tax return for the tax year 2021, it is then the value on 1 January 2021, at 0:00 am. Since there are different rates, the rate of the exchange platform used applies. Did you not have them then, but for example only on 15 April 2021? Then they are not important for box 3 in this return for the tax year 2021, because the reference date for this has already passed. Did you have the bitcoins in this example on January 1, 2022 at 0:00 am? Then you must include them in your tax return for the tax year 2022.
In certain situations, you must declare your income in box 1 of the income tax. In principle, this is the case if you do more than a ‘normal’ investor. The facts and circumstances are decisive. Nevertheless, if you are active to ‘mine’ the coins, for example, according to the tax authorities, you often do not have to declare the proceeds of the ‘mining’ yourself. This is evident from the page: ‘Cryptocurrency (such as bitcoins)’ of the Tax Authorities. But that is different if, for example, your yield is higher than your costs. Or if you often earn extra income with extra work, i.e. on top of your investment activities. Among other things, in these cases there may be income from other work or profit from business and you must declare your income in your tax return in box 1. The positive result is then taxed with a maximum of 49.5% in 2021 income tax (this rate also applies in 2022).
Other (tax) aspects may be important. On the page: ‘Cryptocurrencies (such as bitcoins)’ of the Tax Authorities you can also read information about the tax consequences in a number of other situations. Important point of attention in the event of death
Cryptocurrencies can cause practical problems for the heirs of someone who owned them at the time of death. If these heirs already knew about it, how do they get the money? For this they need at least a personal code (the ‘private key’). But where is that code? Anyone who has bitcoins or other cryptocurrencies, and/or other assets to which this may apply, had better arrange it properly and record all relevant information about this currency properly, while alive. To illustrate this, you can read more about the importance of this here. And then this…
It may be advisable to consult with a tax specialist and a notary about how to deal with bitcoins and other cryptocurrencies, both in your tax return and for a future transfer in the event of death.
