Netherlands seeks input on crypto tax monitoring laws to align with EU

[25/10/2024]
The Dutch government wants to align its data collection rules for crypto service providers with the rest of the EU, saying it would “create more transparency.”

The Dutch government has invited public feedback on proposed legislation that would require crypto service providers, such as exchanges, to collect and share user data with the local tax authority, in line with European Union regulations.

“The goal of the bill is to increase transparency around cryptocurrency ownership, helping to prevent tax avoidance and evasion,” the Netherlands Ministry of Finance stated in an October 24 press release.

The ministry emphasized that under the proposed law, "nothing will change" for cryptocurrency owners, as they are already required to declare their holdings to the country's tax authority, the Belastingdienst.

The proposed law would also enable the tax authority to share data collected by crypto service providers about residents from other EU countries with the respective tax authorities in those nations, in accordance with EU-wide crypto tax reporting rules adopted last year, known as DAC8.

The rules aim to reduce the administrative burden on crypto service providers by allowing them to report only to the EU member state where they are registered, the ministry clarified.

Currently, Dutch cryptocurrency owners are required to pay taxes on their holdings, similar to other investments. However, the Finance Ministry acknowledged that EU tax authorities do not yet have "adequate insight" into the crypto space, leading to inconsistencies within the financial sector. “This bill represents an important step in the taxation of cryptocurrencies,” stated Folkert Idsinga, the State Secretary for Tax Affairs and the Tax Administration.

Idsinga added that in the future, the data exchanges will make cryptocurrencies more transparent to tax authorities, which will "prevent tax avoidance and evasion" and ensure that European governments no longer lose out on tax revenue.

The Netherlands is also among the 47 countries that implemented the Organisation for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) in November.

Additionally, the proposed law mandates that crypto service provider-collected data will be shared with non-EU countries that have signed onto CARF, including the United States, the United Kingdom, Canada, Australia, Singapore, and others.

The deadline for public opinions, advice, and comments on the proposed rules is set for November 21, with the government aiming to present the bill to the House of Representatives by the second quarter of 2025.

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