Report crypto to the tax authorities

The data exchange within Europe (and beyond) is fast and works better and better. In addition to income, life insurance, pensions, savings accounts, real estate and investments, crypto/bitcoin information will also be automatically provided to the Dutch tax authorities in the short term. The EU directives on administrative cooperation (so-called DAC legislation) are becoming more and more comprehensive. Since 2014, when DAC 1 was introduced, it has been ensured that data between many countries is automatically exchanged between the various governments/tax authorities. We have already reached DAC 6 and it is certainly not the final guideline. The world is becoming more and more transparent.

DAC 8 and crypto or bitcoins

First comes DAC 7, which will exchange merchant earnings information on online platforms internationally. Immediately after that comes DAC 8, which will include a reporting obligation for cryptocurrencies. DAC 2 already contains a reporting obligation for banks etc., but this directive did not yet apply to crypto and e-money. The financial supervision of the market will also be improved through the so-called MiCa regulation. The combination of MiCa and DAC 8 will create a new world for providers, traders and holders of crypto, so regulation will increase.

Disclosure regulation crypto

The Dutch tax authorities are already looking forward to this new legislation. Immediately, the information about the crypto holder is automatically passed on to the Dutch tax authorities. This makes it much easier to check declarations and assets. The new legislation is not yet in place, so it is now wise to consult with your tax specialist or adviser about reporting your crypto or e-money to the Tax Authorities.

If you do not report your cryptocurrency, or popularly called bitcoin, to the tax authorities, it will be considered black capital. Because you knowingly make a false statement, this is considered a criminal offence. You can still report this capital that is hidden – or perhaps simply forgotten – to Tax, which they call the so-called voluntary improvement of your tax return or voluntary information scheme. You then still pay the tax due (usually box 3, but for work it can also be box 1). You will also be fined up to 300%.

Redeem benefit with crypto or bitcoin

The advantage of voluntary disclosure is that you will not be prosecuted for knowingly making a false statement. In addition, after disclosure, you can freely dispose of your assets and the fine will often be lower. With €200,000 in crypto, you would normally pay around €2,400 in box 3, this is then increased by a penalty of e.g. 100%, so you have to pay around €5,000 (per undisclosed year). However, the fine can also be higher, depending on the assessment of the tax authorities.

The inclusion scheme abolished

The (formal) voluntary disclosure scheme was abolished in 2018 to improve declarations involving foreign assets (Box 3). This means that no guarantee was given that no criminal prosecution would follow a voluntary information request. The second change to the voluntary disclosure scheme was implemented in 2020. From that moment on, the scheme no longer applies to domestic assets and also no longer to so-called box 2 shares. The voluntary information therefore only applies to box 1 income. Voluntary correction or self-reporting will ensure that there are extenuating circumstances (in the case of a fine or criminal sanction).

Advice on withdrawals or cryptocurrencies

Within our tax law, there are two variants when it comes to (intentionally) submitting incorrect declarations. This can be done via Tax or via the state attorney. In most cases, the Tax Office will process a case and collect unpaid taxes and impose a fine. A settlement agreement is normally entered into between you and Tax. If you cannot find a solution, follow the route towards the Tax Court.

If the criminal prosecution route is chosen, you will be dealing with a prosecutor. The public prosecutor calculates the tax disadvantage and takes the amount of unpaid tax from you. In the case of a limited tax disadvantage (approx. €50,000 – €100,000) a prison sentence of 3 – 5 months (or a suspended prison sentence with community service and a fine) is usually required. The (criminal) court will ultimately decide what sentence should be imposed.

The tax lawyers below deal daily with advising on e-money or cryptocurrency. We also have extensive experience with the voluntary information scheme. We calculate in advance what you have to pay and then also take care of the entire process, including consultation with the tax authorities.

You can contact them by calling our office or by asking a question using the form below. We will not advise you on alternative solutions, simply because we do not want and cannot cooperate in advising on a criminal matter.

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