{"id":17420,"date":"2025-06-05T07:26:46","date_gmt":"2025-06-05T07:26:46","guid":{"rendered":"https:\/\/www.jaeger.nl\/?p=17420"},"modified":"2025-07-24T10:01:44","modified_gmt":"2025-07-24T10:01:44","slug":"cryptocurrency-and-taxation-2025","status":"publish","type":"post","link":"https:\/\/www.jaeger.nl\/en\/cryptocurrency-and-taxation-2025\/","title":{"rendered":"Cryptocurrency and Dutch taxation 2025"},"content":{"rendered":"\n
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This year, Bitcoin has (already) surpassed the milestone of $100,000, and after some minor corrections, the upward trend appears to continue. In a bull market, opportunities abound; however, to enjoy your accrued income or capital without concern, it is crucial to carefully consider any administrative obligations and, of course, the applicable taxation.<\/strong><\/p>\n\n\n\n

In this annual blog, I address the question: “Taxation of crypto assets \u2014 what exactly applies?”<\/strong><\/p>\n\n\n\n

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Several current issues are discussed:<\/p>\n\n\n\n

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  1. How are you taxed as an investor or (day) trader?<\/li>\n\n\n\n
  2. How much tax do you pay on cryptocurrency assets or income?<\/li>\n\n\n\n
  3. Help! I have not reported my cryptocurrency holdings to the tax authorities \u2014 what now?<\/li>\n<\/ol>\n\n\n\n
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    1. How are you taxed as an investor or (day) trader?<\/strong><\/h2>\n\n\n\n

    Income tax applies to individuals. The income tax system is divided into “boxes,” whereby\u2014broadly speaking\u2014\u201cactive\u201d income (wages, business profits, income from other activities, or income from own home) is taxed in Box 1, and \u201cpassive\u201d income (income from assets) is taxed in Box 3.<\/p>\n\n\n\n

    Trading in cryptocurrencies can generally be categorized into the following strategies:<\/p>\n\n\n\n

    a. HODL strategy (\u201cHold On for Dear Life\u201d): cryptocurrencies are purchased and held for a longer period, hoping for price appreciation (regular buying and selling may also fall under this);
    b. Day trading: cryptocurrencies are bought and held for a very short period, such as minutes or hours, often not longer than a day. Positions may be taken with leverage (a financial multiplier);
    c. Swing trading: the investor aims to profit from price fluctuations or \u201cswings\u201d over the short to medium term, holding positions for days or a few weeks, shorter than HODL but longer than day trading;
    d. Day trading using a trading bot: transactions are executed automatically based on an algorithm developed for that purpose.<\/p>\n\n\n\n

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    Source of Income<\/strong><\/h3>\n\n\n\n

    To determine whether taxation falls under Box 1 or Box 3, it is essential to understand the relevant tax assessment framework. The rule of thumb is that taxation occurs under Box 1 if a \u201csource of income\u201d exists. This is the case if all of the following conditions are met:<\/p>\n\n\n\n

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    1. Participation in economic traffic: not exclusively private or merely a hobby;<\/li>\n\n\n\n
    2. Subjective expectation of profit: there is an intention to derive profit;<\/li>\n\n\n\n
    3. Objective expectation of profit: the profit can reasonably be expected.<\/li>\n<\/ol>\n\n\n\n

      In cryptocurrency trading, the first two conditions are generally met. It is the third condition\u2014the objective expectation of profit\u2014that is often not satisfied. Due to extreme volatility, it is difficult to establish in advance that profit from a transaction can reasonably be expected. Even seasoned traders cannot consistently achieve profits through their trades. Generally, therefore, the crypto market is considered speculative in nature. Where speculation exists, an objective expectation of profit is absent, and thus no source of income exists. In most cases, gains from cryptocurrency trading are taxed under Box 3.<\/p>\n\n\n\n

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      Speculation vs. Objective Expectation of Profit<\/strong><\/h3>\n\n\n\n

      The distinction between taxable transactional profits (Box 1) and non-taxable speculative profits (Box 3) depends on whether the results of the trading are attributable to the taxpayer\u2019s efforts. The question is whether the taxpayer\u2019s labor can reasonably influence the achieved results. If not, or if influence is (very) limited, the activity is classified as speculation.<\/p>\n\n\n\n

      Case law on this matter is still developing. From the sparse rulings available, it appears that trading on a single exchange, betting on price movements, constitutes speculation. The result, i.e., price increase or decrease, cannot be influenced by the person purchasing the cryptocurrency. This is comparable to buying a share on a conventional market. Conversely, trading on multiple exchanges and exploiting imperfections between those markets can create a reasonable expectation of profit, provided results are consistently positive. An example is arbitrage trading.<\/p>\n\n\n\n

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      Implications for Trading Strategies<\/strong><\/h3>\n\n\n\n

      HODL, Day Trading, and Swing Trading<\/strong><\/p>\n\n\n\n

      The HODL strategy is considered passive investing: cryptocurrencies are bought and held until price appreciation occurs. Day trading is active investing, involving short-term buying or taking long or short positions. In both cases, results depend on price movements, which (in principle) cannot be influenced by the taxpayer\u2019s efforts.<\/p>\n\n\n\n

      Day Trading Using a Trading Bot<\/strong><\/p>\n\n\n\n

      Day trading with a trading bot involves executing many transactions in a short period\u2014sometimes thousands per day. The ability to transact quickly and frequently enables exploiting small price differences across exchanges (arbitrage), where individual profits are minimal (often just a few cents) but accumulate to a substantial \u201cadvantage.\u201d Due to rapid buying and selling, risks are low. When results are consistently positive, a foreseeable profit exists.<\/p>\n\n\n\n

      Note: Using a trading bot for a HODL strategy, day trading, or swing trading on a single exchange without exploiting market imperfections is still considered speculation, as it relies on (non-influenceable) price movements.<\/p>\n\n\n\n

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      2. How Much Tax Do You Pay on Cryptocurrency?<\/strong><\/h2>\n\n\n\n

      Taxation under Box 1 is based on the net result over the entire calendar year (January 1 to December 31). For Box 3 taxation, only the value of assets on the reference date (January 1) matters. Income in Box 1 is taxed progressively, whereas Box 3 taxes the return on assets.<\/p>\n\n\n\n