Friday, April 16, 2021

Lessons from cryptocurrency related tax rulings

There are no Belgian laws specifically discussing the taxation of crypto-assets. The taxation is similar to other assets without specific legal rules: the profits of individuals can be tax free if normal management of private assets as good house father, or 33% taxed as miscellaneous income for speculative behavior, or up to 50% progressive tax as regular income for professional activities.

Which category is applied in which context, leaves room for a lot of interpretation.

There are 13 cryptocurrency related tax rulings published. 11 of the 13 - the 11 most recent ones - were tax free as normal management of private assets.

The only two things that seemed to have triggered a taxation were frequent trading and corporate investments.

Other things they seem to care about, without examples having triggered taxes:

  • Did you borrow money for your crypto-investments?
  • How much of your total (moveable) assets did you invest in cryptocurrencies?
  • How long did you hold?
  • Is there a relation with your (IT or financial) profession?
  • Is your trading a professional activity?
  • Do you use professional tools?
  • How active are you in the cryptocurrency communities?
  • Do you mine?

There are no clear limits to these questions, but from the 11 tax-free rulings we can at least learn a few acceptable levels. On their own, the following events did not exclude a tax free ruling:

  • 3 purchases in a year
  • Selling bitcoin
  • Selling altcoins
  • Selling less than 1 year after purchase
  • Being jobless during (purchase? and) sale
  • Using a web-based wallet
  • Having no other investments
  • Cryptocurrency investments for (presumably close to but) less than 20% of your moveable assets
  • Large profits (estimations 100-fold or 10000%)

Ruling sources (https://ruling.be):

nr. 2017.852 d.d. 05.12.2017: a student who created an app for the (frequent) trading of his cryptocurrencies got taxed as miscellaneous income.

nr. 2018.0310 d.d. 08.05.2018: a company(!) investing in cryptocurrencies and ICO (initial coin offering) got taxed as corporate income.

nr. 2018.0688 d.d. 25.09.2018: selling after buy and hold was not taxed.

nr. 2018.0709 d.d. 16.10.2018: selling after buy and hold (years long) will not be taxed.

nr. 2018.0710 d.d. 16.10.2018: selling after buy and hold (years long) will not be taxed.

nr. 2019.0771 d.d. 24.09.2019: jobless man selling bitcoin after buy and hold 6 years long will not be taxed.

nr. 2019.0826 d.d. 08.10.2019: selling cryptocurrency won with a puzzle will not be taxed.

nr. 2020.2025 d.d. 08.12.2020: selling after buy and hold long time will not be taxed.

nr. 2020.2175 d.d. 12.01.2021: selling chainlink (originally converted from bitcoin and ethereum) will not be taxed after several years of buy and hold.

nr. 2020.2176 d.d. 12.01.2021: selling chainlink (originally converted from ethereum) will not be taxed after several years of buy and hold.

nr. 2021.0011 d.d. 02.03.2021: after investing less than 20% of his moveable assets in cryptocurrencies, and years of buy and hold, selling will not be taxed.

nr. 2021.0028 d.d. 02.03.2021: 2 cryptocurrencies purchased last year and partially sold last year will not be taxed

nr. 2021.0041 d.d. 02.03.2021: after 6 years of buy and hold, selling cryptocurrencies will not be taxed

The tax department and other financial departments compiled their own crypto knowledge base at https://eservices.minfin.fgov.be/myminfin-web/pages/fisconet/document/6322e414-fc09-4159-828a-523255af1093/crypto

There are no official publications yet about more complex topics such as mining, staking, ...


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