Cryptocurrencies such as Bitcoin, Ethereum and other digital currencies have become increasingly popular in recent years. But what does this mean for your tax return in Belgium? It is not always clear whether and how you should declare your crypto accounts. In this article, we discuss the rules, requirements and possible consequences of non-compliance, as well as the impact of international reporting obligations such as the Common Reporting Standard (CRS) and the DAC8 directive.
What are the current rules?
Crypto accounts are currently not explicitly mentioned in the list of foreign accounts that must be declared in the annual personal income tax return. They are also not explicitly mentioned regarding the declaration of crypto accounts with the so-called CAP (see below). However, this does not mean that there is no obligation to declare.
Registration with the Central Contact Point (CAP)
If a foreign crypto account needs to be declared in the personal income tax return, it must also be registered with the Central Contact Point (CCP) of the National Bank of Belgium. The CCP is a database in which financial data of Belgian taxpayers are registered. If you have a foreign account, including a foreign crypto account, you may need to register it with the CCP.
When should you declare your crypto account?
If you have a foreign crypto account (for example a wallet at a foreign crypto platform such as Coinbase, Binance, Kraken, Bitvavo, Blox, Bybit, Phemex, etc.), we assume that you must include this in your annual personal income tax return. In addition, it is also required to report the foreign crypto account to the CAP. However, the latter is easier said than done, as you must state an account number at the CAP that you usually do not have when it comes to a crypto wallet. In addition to keeping crypto in a wallet at a crypto platform, it is of course also possible to manage your wallet yourself (instead of storing it at a centralized entity such as Coinbase, Binance, Kraken, Bitvavo, Blox, Bybit, Phemex, etc.). If you manage the wallet yourself under the motto "not your keys, not your coins", without the intervention of a third party, e.g. via a software wallet (e.g. Exodus) or via a hardware wallet (e.g. Ledger or Ngrave), then there is in our opinion no obligation to declare because such wallets do not qualify as a foreign account.
What are the risks and sanctions of not reporting?
Failure to comply with the reporting obligation may result in administrative fines and tax increases:
Administrative fines: Failure to declare foreign accounts, including crypto accounts, or failure to register with the CAP may result in administrative fines of up to EUR 1,250 per violation.
Tax increases: If the tax authorities determine that you have concealed taxable income from crypto assets, this could result in tax increases ranging from 10% to 200% of the tax owed.
Want to know if you have to declare your crypto income? You can find more information here .
Can the tax authorities obtain information about my foreign crypto accounts?
There is currently a system of international data exchange with 120 countries (including all countries of the European Union) through which the tax authorities receive data on foreign financial accounts (such as bank accounts) held by Belgian taxpayers, as well as which income (interest, dividends, etc.) is realised. This system is called the Common Reporting Standard. At the moment, the CRS system is not yet applied to crypto accounts.
However, the European Union is currently preparing the so-called "DAC8" directive. The DAC8 directive is an extension of the existing directives within the European Union for administrative cooperation in the field of taxation. DAC8 specifically aims to introduce reporting obligations for crypto assets. This would mean that European member states, including Belgium, could in the future be obliged to share information on crypto assets of their taxpayers with other member states. The implementation of DAC8 is still in development, but when it comes into force, crypto assets will be subject to the same reporting requirements as other financial assets. This means that the Belgian tax authorities will receive data from foreign crypto platforms on an annual basis, which they can then verify with the submitted personal income tax return. Do you have questions about your reporting obligation? Please contact us to discuss your legal options. An appointment can be made by e-mail or via our appointment page.
Christophe Romero Senne Verholle
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