Cryptocurrency tax Netherlands
Do you have any questions about the accounting of cryptocurrency?
MFFA Belastingadvies | Tax Advice
Cryptocurrency tax Netherlands
Cryptocurrency, broadly defined as virtual or digital money, is already accepted as payment by some major companies. You can pay for your coffee at Starbucks using your Bitcoins. Or even buy a Tesla using your Bitcoins. But what are the tax consequences if your Dutch BV (private limited liability company) is paid in Bitcoins or another cryptocurrency?
Cryptocurrency tax Netherlands for the Dutch BV
By law, the Dutch BV carries out its business with all its assets. Bitcoins and other cryptocurrency that a BV holds, therefore belong to the company’s capital. As a result, realized gains are considered as profits. Losses are deductible. The taxable profit is taxed with corporate income tax. The current (for 2021) Dutch corporate income tax rate is 25% (15% on the first €245.000).
Cryptocurrency as payment method
Received Bitcoins and other cryptocurrency in return for goods sold or services rendered are recognized as turnover. The value has to be converted into euros. The converted amount is the turnover considered. When exchanging cryptocurrency, you make a profit or loss. This is reflected as well in your profit and loss statement.
Cryptocurrency on balance sheet
In addition, Bitcoin and other cryptocurrency that are present on balance sheet date in the BV are valued at cost price or lower market value (as current assets or inventory). Consequently, no profit needs to be considered if the value has increased above cost price on balance sheet date. When the market value is lower than the cost price, this loss is considered. When the cryptocurrency is sold, the profit or loss is reflected in the profit and loss statement.
Valuation of cryptocurrency
Below an example of the valuation of cryptocurrency against cost or lower market value. This example illustrates that losses are taken when they occur, and gains are accounted for when realized.
- On January 1st, 2020, you (the company) have received 1 Bitcoin against a value of €1.000 (cost)
- The market value on December 31, 2020, is €500;
- The market value on December 31, 2021, is €1.200;
- On March 31, 2022, you sell your 1 Bitcoin against a value of € 1.600
|Market value (€)||Value on balance sheet (€)||Gain/loss in P&L (€)||Comments|
|Purchase on 1-1-2020||1.000||1.000||–|
|Value on 31/12/2020||500||500||-500 (loss)||You need to take a loss into account as your Bitcoin is worth less.|
|Value on 31/12/2021||1.200||1.000||500
|You must account for a gain of €500 since the value was set on €500 and €1.000 is the original cost of one Bitcoin. The other €200 gain doesn’t have to be accounted as a gain as this in unrealized.|
|Sale on 31/3/2022||1.600||–||600 (gain)||The value was already set on €1.000. The Bitcoin has been sold. Therefore, the unrealized result will become realized and result in a gain of €600.|
This treatment result in that each cryptocurrency that is received by the company needs to be tracked. The values are based on a transaction base and/or a monthly approach (this depends on the volume of the transactions). When sales of cryptocurrencies occur, this is treated through a first-In-First-Out (FIFO) methodology.
Trading in cryptocurrency
Note that: if a company only trades in cryptocurrencies and has no other activities, cryptocurrencies shall be valued against market value.
Questions about accounting of cyptocurrency?
Do you have any questions about the accounting of cryptocurrency? Or curious how you as private individual or entrepreneur are taxed for your cryptocurrency? Contact us for more information.
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