March 31, 2014

Bitcoin on the Dutch income tax form

Filed under: General by Branko Collin @ 1:49 pm


It was only last year that finance minister Dijsselbloem told Dutch parliament how he was going to treat Bitcoin and already the virtual currency has found its way into the income tax forms.

What you see here is a screenshot of the form I used last weekend to report my income. There is a box for “other possessions” which includes goods, trust funds, inheritances that have yet to be divided and so on. The last line of the yellow explanatory box (enlarged in the illustration) says “virtual mediums of payment (for instance bitcoins)”. Unfortunately the “more information” link doesn’t help you find out how to value your Bitcoins. I am sure that is something left for the likes of Kluwer and Elsevier with their tax guides and tax almanacs.

Since the income tax law of 2001, Dutch income tax is calculated over the money you make from work (box 1), from investments (box 2) and from property minus debt (box 3).

(Thanks to commenter Corné at Iusmentis for pointing this out)

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June 17, 2013

Bitcoin income shall be taxed, Dijsselbloem says

Filed under: Dutch first,Technology by Branko Collin @ 12:19 pm

Dutch people who accept payments in the new Internet currency Bitcoin will have to pay income tax on the funds they receive. Finance Minister Jeroen Dijsselbloem confirmed this two weeks ago after parliament had asked questions about Bitcoin, reports.

According to the minister, the “alternative virtual currency” cannot be seen as “electronic money” because it fails the definition set by the Dutch law. Dijsselbloem also reported that approximately 2% of all Bitcoin users in the world are Dutch, and that these Dutch owners possess about 20 million euro worth of Bitcoin. At the time of writing 1 Bitcoin represents about 75 euro.

Internet lawyer Arnoud Engelfriet helpfully explains that the Wet financieel toezicht (the law on financial control) defines electronic money as a monetary value that

  • Is stored electronically.
  • Represents a claim on the person or organisation who issues it.
  • Is issued in exchange for money to make payments with.
  • Can be used to pay both the issuer and others.

Since Bitcoins do not represent a claim on the issuer and they aren’t necessarily issued in exchange for money, they aren’t electronic money. The reason you still have to pay income tax is simply because the law on income tax doesn’t mention money. Any form of income, whether that income consists of money, goods or Bitcoins, is susceptible to being taxed. The problems start when you have to pay these taxes though, because the Dutch tax office only accepts money. Your revenue will somehow have to be valued in euro before you can calculate how much you have to pay.

I can well imagine that the belastingdienst (tax office) isn’t going to chase down small time Bitcoin users just yet. I remember the first time I became self-employed and asked the belastingdienst for a VAT number. The man on the other end of the line laughed at me and said they could not be bothered to issue me my number for the couple of hundred guilders I expected to make that year.

Another complicating matter according to Engelfriet is that Bitcoins aren’t financial products either. That would mean you will have to pay VAT (‘btw’) over the Bitcoins you receive, which would make trading in Bitcoins less attractive for the Dutch.

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December 9, 2012

Apple iPad is not a phone, Dutch judge says

Filed under: Gadgets,Technology by Branko Collin @ 2:09 pm

Why would you want to ask a court whether an Apple iPad is a phone or a general computer? Well, if computers given as a Christmas bonus are considered income and phones are not, you might have an incentive, especially if the back taxes amount to 323,687 euro.

Broadcaster RTL Nederland gave 664 of its employees an iPad in 2010, including a Vodafone 3G subscription. The law says that something supplied by one’s employer does not count as income if this something is intended “to prevent costs, expenses or depreciations needed for a correct execution of one’s employment”, Arnoud Engelfriet reports.

The law also prescribes categories of devices that are applicable, including “phones, Internet and such communication devices, but not computers, nor similar devices or peripherals”.

RTL Nederland sued the Dutch tax office and the question before the court became whether these iPads were mainly computers or mainly communication devices. The court ruled on 30 November that “considering the format of the iPad (the version the claimants provided has a 9.7 inch screen diagonal) verbal communication should not be seen as the central function of the iPad.”

RTL Nederland will appeal the decision. “We are a media company,” a spokesperson told Webwereld. “We work with those iPads, they are part of our daily business.”

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January 8, 2011

New tax law encourages both marriage and divorce

Filed under: General by Branko Collin @ 8:04 am

Since 2001 tax forms have had a checkbox that allowed two people living together to declare a ‘fiscal partnership’, a relationship just for tax purposes. It appears (I never looked it up before), that if you and somebody else declare a fiscal partnership you get certain tax breaks, such as mortgage interest deductions for the highest earner.

This year the law has changed. It is no longer enough to declare to the tax people that you and Bob are partners, you and Bob need to have some legal status to confirm this. A wedding certificate is good, as is a registered partnership (civil union) or a notarized ‘cohabitation agreement’. The latter is used for non-intimate relationships (think father-son) and sometimes for uncommon intimate relationships (think polyamorous). What also works is owning a house together or having children together. Couples who never got around to making it ‘official’ now have a decision to take.

Interestingly, married couples who are estranged may wish to explore the possibility of a divorce under the new tax regime, Elsevier reports. You see, this new fiscal partnership is obligatory. It is harder to get into, but you cannot opt out either. One reason for such a divorce could be if each partner owns a house, so that they both can get their own mortgage interest deductions.

Another way to become fiscal partners is to have a partner recognised by one’s pension fund.

The people that may be inconvenienced the most by this measure is those who refuse to divorce for religious reasons, even if they no longer live together—a situation called ‘separated from table and bed’ in Dutch, and legally recognized as such, just no longer by the tax people.

(Photo by Eunice Chang, some rights reserved)

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January 1, 2011

Winner new year’s lottery has to pay income tax twice

Filed under: Weird by Branko Collin @ 3:50 pm

The Dutch revenue service (Belastingdienst) has announced that the winner of the Staatsloterij Jackpot will have to pay income tax over these winnings for both 2010 and 2011.

Since 2001 the Dutch income tax is divided into three parts, a tax on wages, a tax on business interests (including dividends), and a tax on savings and investments. The latter category is calculated by taking the money you own on December 31 and the money you own on January 1 of that same year, and halving it. You then pay a one percent tax on the resulting average, the idea being that an average person should be able to realize a profit each year on their savings of investments of 4%, which is essentially a sort of income.

The tax service takes its own formulas very serious and figures that since the prize is won in the dying seconds of 2010, the winner also has to pay this tax on savings over 2010, even if they have not been able to collect and enjoy the prize.

Tax law professor Ruben Freudenthal has been quizzing his students for years on exactly this eventuality, and sides with the Belastingdienst. He told Financieel Dagblad: “Right after the draw the lottery ticket becomes valuable. You could sell it to somebody else.”

The 2010 lottery had a jackpot worth 27.5 million euro. The 2010 tax would amount to 137,500 euro.

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