Countering financing terrorism (CFT) and anti-money laundering (AML) are the two main areas of attention for determining if cryptocurrency is legal in the Netherlands. The Dutch Authority for the Financial Markets (AFM) and the Dutch Central Bank (De Nederlandsche Bank, DNB) are essential regulators. Due to its volatility and lack of consumer safeguards, DNB does not recognize cryptocurrencies as legal cash, which oversees crypto-related businesses and strongly emphasizes AML/CFT compliance.
Similarly, the AFM does not see cryptocurrencies as legal money and frequently warns about their hazards, especially initial coin offerings (ICOs). The primary focus of the AFM is investor protection, emphasizing the dangers of uncontrolled ICOs. Both DNB and AFM support international regulatory cooperation to oversee cryptocurrencies effectively. It would be best to consider these factors when investing in cryptocurrency in the Netherlands.
Cryptocurrencies are not mainly covered by the current regulatory framework, which includes the Financial Supervision Act (FSA) and the Dutch AML Act. However, starting in mid-2024, the EU Markets in Crypto-Assets Regulation (MiCAR) will alter this. To safeguard consumers from the dangers associated with crypto-assets, MiCAR will implement extensive rules at the EU level, including requirements for crypto service providers to meet specific criteria.
Netherlands Crypto Tax Laws: The Dutch Tax and Customs Administration requires private persons to declare cryptocurrency capital gains on their income tax filings. The exchange rate as of January 1st of the applicable tax year is the basis for the value. When there are no set criteria for exchange rates, people usually utilize the rates from the exchange site they use the most, even for cryptocurrencies kept in offline wallets. All crypto trading platforms in the Netherlands must consider this law in their transactions.
Incomes are classified for tax purposes into three “Boxes.” Typically, cryptocurrency revenue is subject to Box 3, which taxes income from assets. On the other hand, mining or trading cryptocurrencies actively may move taxes to Box 1, which handles revenue from different sources. While Box 3 taxes a hypothetical return at 31%, Box 1 taxes real profits at higher rates, up to 49.5%. To file for corporate tax, corporations must include capital gains from digital assets in their profit and loss statements. The tax rate on these profits varies according to the income bracket.
