You may have talked to a family member about trading crypto. Or are you even thinking of getting started. Maybe you’ve even done it for a while and you’re slowly but surely starting to earn something from it. In all these cases, you have undoubtedly never had the talk of the tax you have to pay on this.
But what about tax on crypto? Are you going to pay for this? And if so, how? How do you declare it? How is this controlled? Etc. We answer all these questions and more in this article.
Cryptocurrency and tax
Just to get straight to the point. Yes, you have to pay tax on your crypto. For the law, crypto is simply a way of trading and investing. So the same rules apply here. There is no such thing as a special cryptocurrency yet. Who knows if this will ever happen in the future.
Each year, you must state your tax on crypto in box 3 with your tax return. At that moment, add the value of your crypto and specify this. This does not make crypto and tax in that area harder than it is now to invest. And if you have invested a large amount, it can be helpful to have a specialist make your tax return.
Cryptocurrency and government
As is often the case with new innovations, the government is often a bit behind in time. Likewise with crypto. Although it is mandatory to pay tax on crypto. Is it very difficult for the government and therefore for the tax authorities to control?
This has to do with the fact that most crypto is completely anonymous. It is impossible for almost anyone to find out who owns how much crypto. Because there is currently no proper oversight of this, there is a good chance that large-scale fraud is currently being committed.
Committing fraud is something we certainly advise against, also with a view to the future. The tax authorities may still impose fines retroactively up to 12 years after the date. This means that if in the future there is a way that allows the tax authorities to check this, you will run into problems.
It is a thorn in the side of the government and it is therefore difficult to assess how much the government is missing out on in this way. However, it is likely that this will grow each year as more and more people invest in crypto. The vast majority of these people will not intend to commit tax evasion but will simply not know the rules well. Or will make mistakes in the valuation of their crypto at the time of filing.
Pays tax on crypto
As we have already stated a number of times now, you will pay your tax on crypto in box 3. In 2021, it will be 31% of the taxable income of your investments. This means that you file your tax return normally, just as you are used to. Only you now also enter the value of crypto in box 3.
Once you have filled in everything, you will see if you have to pay extra tax and if so how much it is. We recommend that you always pay this as soon as possible so that you can not forget this. It also means that you can not get a fine for late payment.
You can not pay your tax with crypto yet and it does not look like this will be the case in the near future. This is mainly due to the fact that it is not even a theme on the political agenda in The Hague. This means that you may need to convert part of your crypto back into euros so that you can pay your tax in euros.
Tax on Bitcoin?
I hear you ask, do you have to pay tax on Bitcoin? The answer to this is also a clear yes. Bitcoin is a crypto, so you should treat it like any other crypto. Despite the great fame that Bitcoin enjoys over other cryptocurrencies, there is no such thing as a special Bitcoin treasure. The value of a particular investment is not a reason for the tax authorities to change the scheme.
Frequently asked questions about tax returns and cryptocurrencies
Can I pay my tax in crypto?
No, it is not possible to pay your tax with crypto. This is currently only possible in Euros. It is therefore necessary that if you do not have enough money in euros to pay your taxes, that you first convert your crypto to euros before paying your taxes.
How do the tax authorities view crypto?
For the tax authorities, crypto is an investment. This means that you indicate it under box 3 and that all legislation applicable to investments also applies to crypto.
What happens if I do not file a crypto tax return?
This is perhaps the hardest question you can ask right now. Because it is almost impossible to check how much crypto you own. It is also virtually impossible for the tax authorities to impose fines for this. Keep in mind, however, that failure to report is fraud, and the penalties for fraud can range from simple fines to jail time. Which the tax authorities can impose up to 12 years after the date.
Do you have to pay tax on Bitcoin?
Yes, you have to pay tax on all the Bitcoin you own and all other crypto. You do this in the same way as for all other investments by entering it in box 3.
Want to know more about cryptocurrencies and the tax authorities? Read more here.