Bitcoin and cryptocurrency trading in Netherlands
The Netherlands gets 7/10 for its mix of wide cultural acceptance of crypto. It is open to investing and people can spend crypto unhindered, but there is no specific government lead on regulation or strategy.
Law and crypto trading in NetherlandsLegal - existing crypto legislation
Trading bitcoin in The Netherlands is well advanced and the country has a healthy acceptance of bitcoin and other cryptocurrencies. The country offers plenty of choices when selecting a crypto exchange and, as a Dutch resident/user, you can choose from platforms based at home or overseas. Buying, selling, and trading bitcoin is all a question of what level you wish to enter the activity, and there are advantages and disadvantages to choosing a home-based or overseas platform. Using Dutch exchanges means that buying bitcoin with euros is easier and using local payment methods is probably simpler.Legal - forthcoming crypto legislation
Generally speaking, cryptocurrencies are considered legal across the European Union, but cryptocurrency exchange regulations depend on individual member states. Regulations may vary by member-state, and by compliance with the European Banking Authority (EBA), European Commission (EC), European Central Bank (ECB), European Insurance & Pension (EIOPA), European Supervisory Authority for Securities (ESMA). Cryptocurrency taxation also varies but many member-states charge capital gains tax on cryptocurrency-derived profits at rates of 0-50%.
Taxing cryptocurrencies in Netherlands
The Dutch tax authority, the Belastingdienst, are the people who will want an account of your crypto trading or investing as part of your yearly accounts. There are guides for tax on crypto but like most countries, there are areas that aren’t clear cut or easy to understand.
Cryptocurrency trading is treated as property and taxed as capital gains in The Netherlands. However, the basis of your trading can only be carried back to January 1st of the given tax year, and it resets again each tax year on January 1st so you’ll have tax on gains or losses based on the change in value over the year. Put another way, if you buy a cryptocurrency during the tax year, you are taxed on any gains it makes between the time of acquisition and at the end of the tax year. All of your gains and losses are reportable on your tax return and your tax brackets for capital gains on property are determined by your net gain minus losses from the current tax year only.
If you’re buying and selling on a business basis, then separate tax rules apply and your cryptocurrency gains would be taxed as income like any other business activity. What level of trading qualifies as a business, however, is something you need to get advice on.
Needless to say, you’ll have to pay tax on your trading so you’ll need to keep records and some exchanges are more advanced in helping you do this. As with most countries, holding bitcoin in your wallet and sitting on them or transferring them between wallets incurs no tax, but make sure you aren’t getting confused –it’s easy to do- between transferring them, transacting them, or disposing of them.
Tax when moving residency
As with any income, your crypto will come under the tax laws of the country you become legally resident. If you move outside The Netherlands but are still resident make sure you have detailed transaction reports about your purchases and sales across all exchanges you used. If you set up a business to trade crypto, that business will come under the tax laws of the country it operates from.
Tax on mining
Mining is fantastically complicated and unless you’re a technical specialist it is beyond the scope of most individuals. To bring things back to earth, mining for bitcoins or any other cryptocurrencies is, you guessed it, a taxable event. In The Netherlands, mining of crypto by individuals is taxed as other income and the taxable amount is the net profit you make on your mined coin. Cryptocurrency trading and mining are typically treated as property and taxed as capital gains in The Netherlands. Unlike other countries that tax crypto as property, however, the cost basis can only be carried back to January 1st of the given tax year, and it resets again each tax year on January 1st. So, if you are mining bitcoin, you are taxed on the sale price of your crypto at the time of disposition minus the costs associated with mining it.
Crypto financial services in Netherlands
Investing in crypto has become increasingly recognized by Dutch financial institutions. However, cryptocurrency is not generally recommended for pension plans and retirement funds due to risk and volatility. The situation is changing all the time.
De Nederlandsche Bank NV (DNB), the Dutch central bank, has actively registered a number of companies to provide cryptocurrency services in line with the EU Anti Money Laundering Directive.
DeFi has some way to go in most countries, although leading Dutch Bank, ING stated that it saw increasing opportunities with regard to digital assets with a keen focus on developing blockchain technology. The bank is already involved in a number of blockchain initiatives.
Using crypto in Netherlands
Bitcoin is on the up in The Netherlands and Arnhem is one city that has a reputation for its acceptance of crypto, with one of the highest concentrations of places accepting bitcoin worldwide. The way is open to dentistry (as usual), buying property, holidays, and entertainment. Several world brands accept Bitcoin payments including, most famously, Microsoft and Starbucks. In most cases, it is possible to buy vouchers with your crypto that may then be indirectly used with participating outlets and there is an ever-expanding number of bitcoin ATMs in service.
If you’re feeling generous, you can gift crypto but it is subject to a gift tax wherever and however you store or trade your currencies. The Netherlands levies gift and inheritance tax on assets gifted by or inherited from individuals resident in The Netherlands, but you can gift to a recognized charity or non-profit organization and most crypto exchanges will be able to advise on gifting your coins.
Crypto regulation in Netherlands
The central bank only supervises compliance with the Money Laundering and Terrorist Financing (Prevention) Act and the Sanctions Act 1977. Financial business risks are not monitored and there is no specific financial consumer protection. You might feel reassured that you can access local customer support and get better consumer protection from home-based exchanges as these are subject to regulation by the country’s central bank, De Nederlandsche Bank. Obviously, overseas platforms, especially large well-established ones such as Coinbase may be able to offer more and faster services. Regardless of whether you choose a Dutch or overseas crypto exchange, you need to do your homework and make comparisons before deciding.
The environment surrounding Dutch digital currency exchanges is becoming clearer all the time, security is always worth checking oout. Also, how much your transactions will cost across exchanges. You might want to see if there are limits on what you can transfer at any one time, that sort of thing. Bitcoin is well known across the world, but if you’re looking at other cryptocurrencies as well as bitcoin, then you need to see if your exchange can handle them.
Claiming a loss through fraud or theft is quite complex as there are so many definitions to comply with, including asset price and circumstances. If your crypto wallet has been stolen, you cannot claim any immediate tax relief, but you should record any losses as you can offset these with any future crypto profits within one year. You’ll also need to make clear whether your losses were part of a trading business or for personal investment purposes. Reputable exchanges carry insurance against fraud or hacking. You’re more likely to be claiming some form of compensation from the exchange.