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Bitcoin Regulation and Bitcoin Tax in the Netherlands
There is an Old Dutch Proverb, “The soup is not eaten as hot as it is served.” Indicating that a threat is not always carried through to the end.
This might be aptly applied when it comes to Bitcoin in the Netherlands. Tax in the Netherlands is different to the US. There is no profit tax but instead there is a capital tax (kapitraal belasting) which encompasses all your property or assets. For all value in euro you have above 25,000 in a year you pay 1.2 in taxes. However it is the net worth after any loans, mortgages and expenses are deducted so any bitcoin assets you may have would also be included. This seems to indicate that the government regards Bitcoin as an asset rather than a currency. However it is not as simple as that.
As there is no central issuer of bitcoin such as there is with the fiat currency, no one area can qualify Bitcoin as virtual money and it is not considered a financial product under Dutch law. This means that Bitcoin is not regulated under Dutch Law. The WWFT law*, designed to prevent money laundering and financing terrorism does have a definition for digital currency. But this applies to currencies issued by a centralised body which of course Bitcoin is not. Therefore according to Dutch Law crypto currencies are not covered under the category of digital money. This is possibly an oversight which is likely to be corrected sometime in the near future.
The general expectation is that Bitcoin will at some time in the future be regulated.
In a civil rights case where it was alleged a shortfall of bitcoins was paid, the Court of Overijssel determined the following: “The claim under Article 6: 125 of the Dutch Civil Code is based on the assumption that the Bitcoin can be regarded as ‘money’ within the meaning of Section 6.1.11 of the Dutch Civil Code. The court comes to the conclusion that the Bitcoin cannot be regarded as money in the sense of Section 6.1.11 of the Civil Code, but must be regarded as a means of exchange. The district court assigns the claim on account of the reversal obligation under article 6: 271 of the Netherlands Civil Code and the claim for damages for lost profit. The damage that is caused to the moment of dissolution of the agreement is eligible for compensation.”
The general consensus is that a clearer policy on the cryptocurrency arena is required and a discussion on the subject held at Tweede Kamer, the lower house of parliament, representatives from the financial regulator AFM, the Dutch central bank, consumer authority ACM, Dutch bank ING, spoke before inquisitive MPs.
Niels Lemmer of investors’ association VEB stated, “We implemented thousands of new rules to protect investors. But something parallel like an ICO is not regulated. We see all the characteristics of a bubble, but people don’t want to hear that this involves an unregulated market. Now we’re still in time to create a regulatory framework so that we can benefit from this innovation, without the excesses.”
Rutger van Zuidam of Dutchchain is in favour of clearer rules and regulations, “The wave of ICOs is here, it won’t go away. So create an environment in which the Netherlands is the best place for companies to develop”, he said.
Meanwhile the ABN AMBRO banks have launched a new service in which bank accou9nts can be issued via the blockchain as an alternative to the usual escrow accounts. ABN AMRO Launches Blockchain Bank Accounts to Kill Escrow Accounts. According to Bitcoin.com, ‘The Amsterdam-based banking giant has announced a new service wherein individual client within non-bank organizations entrusted with client funds – think brokers, notaries, exchanges etc. – will directly connect with its clearing bank over a blockchain. Used by fund managers without banking licenses, escrow accounts see clients transfer funds into these accounts before the capital is accessed by the organization. The new blockchain product effectively negates the need for escrow accounts with the transfer of funds between the organization and clients included in the payment process.’ The bank says this will ‘dramatically’ reduce administration costs for the organization by eliminating escrow account management costs.
Amsterdam-based FinTech stock exchange operator Nxchange is the bank’s first client to use the blockchain-based bank accounts. The exchange, which enables direct securities trading between companies and investors, will begin using the service this month.
Nxchange chief executive Marleen Evertsz states, “The solution simplifies the way investors can invest in businesses and other issuers. Block chain technology also offers a wider future perspective to facilitate transactions in multiple asset categories in distributed networks.”
This article is for information purposes only and is not to be construed as financial information for any purpose such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.
This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.
* “Wet ter voorkoming van witwassen en financieren van terrorisme or Wwft [Anti-Money Laundering and Anti-Terrorist Financing Act] entered into force on 1 August 2008. The Wwft implements the EU’s Third Anti-Money Laundering Directive in Dutch national law and subsumes the pre-existing Wet identificatie bij dienstverlening or Wid [Identification (Provision of Services) Act] and the Wet melding ongebruikelijke transacties or ‘Wet MOT’ [Disclosure of Unusual Transactions (Services) Act]. The Wwft provides a comprehensive set of measures to prevent the use of the financial system for money laundering or terrorist financing.”