Netherlands Crypto Tax

The Netherlands offers one of the most favourable tax regimes in Europe. The country ranks 14th in the 2022 International Tax Competitiveness Index, which is an indication that the Dutch taxation framework is reasonably structured and makes it easy for businesses to comply with tax regulations, as well as promotes economic development.

The Dutch Tax and Customs Administration is responsible for imposing tax regulations, inspections, and the collection of taxes on behalf of the government. It also implements various tax reliefs and schemes for tax residents and non-residents. The authority classifies cryptocurrencies as an asset, and crypto companies must share their transaction data with it.

Since the Netherlands is a member of the ​​Organization for Economic Cooperation and Development (OECD), it will also have to integrate the new international tax transparency framework, entitled Crypto-Asset Reporting Framework (CARF) which has been recently introduced by OECD with the aim to improve crypto taxation and tax reporting standards. In accordance with CARF, the Dutch Tax and Customs Administration is obligated to automatically share crypto tax-related information with the international tax authorities. Moreover, the treatment of cryptocurrencies for tax purposes in the Netherlands is also impacted by such EU regulations as Markets in Financial Instruments Directive 2 (MiFID 2).

The taxation of a crypto company is determined not only by the business model, but also by its tax residency status. Companies established under Dutch law are generally deemed to be tax residents of the Netherlands. Also, a company is considered a tax resident in the Netherlands if its place of effective management is in the Netherlands, although local law doesn’t include a definition of a ‘place of effective management’ and it’s determined by facts and circumstances on a case-by-case basis. Normally it’s the case when the Netherlands is the place where important business decisions are made, where company directors work and meet, and where the business records are kept, and the financial statements are prepared.

Corporate Income Tax

The Corporate Income Tax rate depends on the taxable amount, which is the taxable profit in a year reduced by deductible losses. If the taxable amount doesn’t exceed 200,000 EUR, the 19% rate applies. If the taxable amount exceeds 200,000 EUR, companies have to pay 59,250 EUR, and a 25.8% tax is levied on the taxable amount exceeding 200,000 EUR. Since generally Dutch taxpayers are taxed on the presumed increase in value of their assets based on the fair market value on the 1st of January, even held cryptocurrencies are taxed, which isn’t the case in most other European jurisdictions.

A special 9% rate applies to income, including royalties, sourced from originally developed innovative assets which are covered by the innovation box. The purpose of this box is to provide tax relief which encourages innovative research and development (R&D). Businesses are eligible for the innovation box if at least 30% of the profits have been sourced from the patent. Also, if the development of the intellectual property has no patent but has incurred R&D costs, such a company is also eligible for availing of the reduced 9% rate.

It’s important to note that the 9% rate applies exclusively to positive income, allowing innovation losses to be fully taken into account. Companies can also include profits from an intangible asset sourced during the period between the patent application and the granting of the patent in the innovation box regime.

Another effective way to optimise taxes in the Netherlands is through international agreements covering various types of income. The Netherlands has around 80 international agreements on the elimination of double taxation. They provide clarity on the treatment of cross-border trade and investment, as well as protect businesses from having their income taxed twice in two different countries.

Crypto-specific rules pertaining to the Corporate Income Tax include the following:

• Cryptocurrencies are taxed as assets
• Cryptocurrencies received from mining are subject to Corporate Income Tax based on their market value upon receipt
• Cryptocurrencies received by airdrop are subject to Corporate Income Tax based on their market value upon receipt
• The lending of cryptocurrencies is not treated as a taxable disposal

Value-Added Tax

In the Netherlands, the application of VAT is aligned with the EU’s VAT Directive. The standard VAT rate is 21% which is levied on products and services sold in the territory of the Netherlands. Numerous exemptions apply depending on the nature of the business. For instance, the issuance of security tokens is also VAT-exempt as it’s similar to purchasing vouchers. The tax liability arises when the tokens are exchanged for products or services.

In accordance with the decision of the Court of Justice of the European Union (CJEU), crypto exchanges (including exchange into fiat money and vice versa) are VAT-exempt. However, other crypto-related products and services might be subject to VAT and therefore crypto companies have to register as VAT payers with the International Office of the Dutch Tax and Customs Administration.

Withholding Tax

Dividends received from Dutch resident companies are generally subject to a 15% Withholding Tax. Exemptions may apply if the recipient of the dividends distributed by the Dutch company is a resident of the EU or EEA or another country with which the Netherlands has signed a tax agreement that includes a section on dividends. Exemptions may also apply if the recipient of the dividends would have been able to apply the Dutch participation exemption or the participation credit to the dividends if it would have been a resident of the Netherlands.

Gift Tax

Cryptocurrencies gifted by a resident of the Netherlands are subject to the Gift Tax. The rates vary between 10% and 40% of the value of the cryptocurrencies received on the date of the gift. The applicable rate is determined in accordance with the level of connection between the donor and the donee. Tax exemptions apply in certain cases. In-game rewards transferred in cryptocurrencies aren’t taxed unless the transaction is done professionally, in which case it’s subject to the Personal Income Tax (Box 1).

Personal Income Tax

Employees of Dutch crypto companies are subject to Personal Income Tax. Residents of the Netherlands are taxed on their worldwide income, and non-residents are only taxed on their income sourced within the territory of the Netherlands, which includes employment income, director’s fees, business income, and income from Dutch immovable property.

Worldwide income is classified into three different types of taxable income, and each type is taxed separately under a specific schedule (a box) which has its own tax rate(s). An individual’s taxable income is based on the accumulated income in these three boxes.

The boxes are as follows:

• Box 1 – income sourced from profits, employment, and homeownership (in 2023, the rate has been reduced to 36.93% on income not exceeding 73,031 EUR)
• Box 2 – income sourced from substantial interest (the rate is 26.9%)
• Box 3 – income sourced from savings and investments (the rate is 32%); the tax-free capital limit is 57,000 EUR

Social Security Contributions

In accordance with Dutch laws, every individual working in the Netherlands is covered by the national insurance schemes for a state pension and surviving dependents. These contributions are withheld by the employers from the salaries of the employees and remitted to the Dutch Tax and Customs Administration. The national insurance contributions are withheld from all components of the employment income – salaries, holiday allowances, overtime pays, end-of-year bonuses, and benefits in kind. National insurance contributions are levied on income up to 37,149 EUR and capped at 10,272 EUR per annum.

Employers also remit employee insurance contributions. These contributions cover the unemployment benefit scheme, sickness benefits, disability insurance scheme, and the work and income (capacity for work) scheme. Instead of withholding these contributions from salaries, employers pay them themselves. These contributions are paid on income of up to 66,956 EUR. The rate is determined depending on the company’s industry, and the annual average per permanent employee is around 7,887 EUR. The annual average per temporary employee can reach 11,235 EUR.

How do I pay taxes on crypto in Netherlands in 2024?

In 2024, the taxation of cryptocurrency income in the Netherlands remains a hot topic for investors and users of these digital assets. The Netherlands is known for its progressive approach to financial innovation, including cryptocurrencies, but is also keen to ensure appropriate tax regulation. It is important to understand local tax rules and obligations in order to effectively manage finances and avoid potential penalties for non-compliance with tax laws. In this article, we look at how to pay tax on cryptocurrency income in the Netherlands in 2024.

Basics of cryptocurrency taxation in the Netherlands

In the Netherlands, cryptocurrencies are generally classified as “other property” for tax purposes. Income from cryptocurrencies is taxable, but the methodology and rates of taxation depend on the type of income and the circumstances of the activity.

Box 3: Taxation of capital and savings

Income from investments in cryptocurrencies in the Netherlands is taxed under “box 3” (taxation of capital and savings). Instead of taxing actual income or capital gains, the tax base is calculated based on the estimated investment income. Tax rates in box 3 can change, so it is important to check up-to-date information.

Calculation of the tax base

Cryptocurrency holders must declare the value of their assets as at 1 January of the tax year. The tax rate in Box 3 applies to the aggregate value of all assets less debts, subject to applicable tax credits and deductions.

Income declaration

Taxpayers are required to include information about their cryptocurrency assets in their annual tax return. It is important to keep detailed records of all purchases, sales and exchanges of cryptocurrency to facilitate accurate declaration.

Income tax for entrepreneurs

If cryptocurrency is used as part of business activities, the relevant income may be taxed as corporate income tax. In such cases, different taxation rules and rates apply.

VAT and cryptocurrency

According to European Union jurisprudence, the exchange of traditional currency to and from cryptocurrency is exempt from VAT. This rule also applies in the Netherlands, which means that cryptocurrency exchange transactions are not subject to VAT. However, the provision of services related to cryptocurrency, such as mining or exchange transactions, may fall under the general VAT rules, depending on the circumstances.

Recommendations on paying taxes on cryptocurrency income

1. Record keeping: Accurately keeping records of your cryptocurrency transactions will ensure that you can accurately declare your income and expenses. Include the date, amount and value of the transaction in euros at the time of the transaction.
2. Consult an expert: Tax laws can be complex and subject to change. A professional tax advisor can help you determine your tax status and ensure you are in compliance.
3. Timely filing: Make sure that you file your tax return on time to avoid late payment penalties and interest.
4. Explore tax incentives: In some cases, such as investing in startups or innovative projects, you may be able to take advantage of tax incentives. Check whether they apply to your situation.

Conclusion

Taxation of cryptocurrency income in the Netherlands requires careful record keeping and an understanding of tax laws. It is important to stay up to date with the latest changes in the tax code and use all available resources and advice to optimise your tax burden. With the right approach and proper attention to detail, you will be able to effectively manage your tax liability on your cryptocurrency income.

Table with the main tax rates in the Netherlands for 2024. This table includes personal income tax rates, corporate tax, VAT, and information on capital gains tax that may be applicable to cryptocurrency income.

If you’re determined to succeed in the Netherlands and wish to pay optimal taxes, highly qualified and experienced legal consultants of Regulated United Europe (RUE) will be pleased to assist you in structuring your taxes. We very well understand and closely monitor crypto Dutch and international taxation rules, and strive to ensure that our clients not only comply with local regulations but also operate in a tax-efficient way. Moreover, we’re more than happy to help you with company formation, crypto licensing, and accounting. Book a personalised consultation now.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.