Hello 👋,
This article will expose the basics of crypto asset taxation in Belgium.
In Belgium, there are no rules specifically dedicated to crypto-currencies. However, the lack of clear regulations is not indicative of a lack of tax rules!
It is the general criteria from the Income Tax Code that will be applied to crypto assets. The tax authorities also have an Advance Rulings Service (SDA) which issued a "ruling" in 2017 referring to the fact that "investments in cryptocurrencies are generally speculative in nature and the income derived from them should, therefore, be treated as 'miscellaneous income'."
▶️ So, capital gains from cryptocurrencies will be taxed as miscellaneous income. Nevertheless, some particular types of income such as passive gains from staking or farming operations will be taxed as Capital income.
The taxation of private individuals in Belgium concerning the gains realized via crypto-asset operations revolves around the central notion of "normal management of assets".
👉 From this notion, several investor profiles will follow:
The "good father": management as a good father, prudent ;
The speculator: riskier profile, aim of return;
The professional: economic activity.
❗️ The tax obligations, declarations and the amount of tax due vary according to the profile of each individual. Find the tax obligations for each profile on this article.
To know your tax obligations, it is essential to determine your investor profile.
The difficulty is that the determination of the profile is often done by the taxpayer himself. Waltio provides you with a free survey that allows you to determine your profile using 14 questions.
Two types of income must be taken into account and calculated in Belgium:
Income from your trade gains or losses ;
Passive income.
👉 Calculating your capital gains or losses
The capital gains will be the gains from the taxable transactions of selling your crypto assets for fiat/goods/services/crypto.
The tax is due when the user makes a digital asset’s cession.
❗️ There are differing opinions among legal professionals on whether or not crypto/crypto transactions are taxable. On March 9, 2023, the Minister of Finance made a statement via a parliamentary question answering that crypto/crypto transactions are taxable.
At Waltio, we therefore propose a default calculation that considers crypto-crypto transactions (including stablecoins) taxable. Another calculation method excluding these transactions is offered as an option.
These earnings will be taxed as "miscellaneous income" and will be subject to a 33% tax.
The calculation is done according to the FIFO method (first-in, first-out): the first crypto bought will be the first sold according to the chronology.
It will then be necessary to carry out a mathematical formula.
Gross capital gain: Transfer price - acquisition price
Net capital gain: Deduction of the expenses relating to the transfer
Acquisition price: the acquisition price is equal to the purchase value of your crypto. This value is deducted from the fees you paid to acquire your crypto currency.
▶️ Example:
I buy 0.001 BTC for 1000 e, of which 100e is a fee to perform this transaction.
Purchase price of my 0.001 BTC = 900
Transfer price: the selling price of your asset
Fees: the fees related to the transfer are the fees often paid to the platforms/protocols to carry out the sale operation.
▶️ Example:
I bought 0.001 BTC for 900e.
I sell 0.001 BTC for 2000e of which 100e are fees.
My capital gain is 1100e, it will have to be declared as miscellaneous income and will be subject to a 33% tax
I will report the 100e of fees when I declare my capital gains (these expenses will be deducted from my capital gains).
💡 Capital losses are deductible from capital gains over the year and can also be carried forward for the next 5 years against miscellaneous income.
👉 Calculating your passive income
Passive income are the earnings from operations that will generate interest:
Staking gains;
Farming gains;
Liquidity pool earnings.
These gains will be taxed as "capital income" and will be subject to a 30% tax.
The calculation of these income consists of taking into account the fiat value of the cryptocurrency received according to its market value.
It's the amount of the acquisition price that will be taxable
The acquisition price will be the price equal to the market value of the cryptocurrency on the day of its receipt.
▶️ Example:
April 4, 2022: I received 0.5 ETH in staking earnings.
The fiat value of 0.5ETH on April 4, 2022 is 1000e
👉 My gain is 1000e. It will have to be declared as a movable income and will be subject to 30% tax.
If you have any other questions, please feel free to contact us via the chat just below right on your screen! 💬
The Waltio team