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The crypto-currencies taxation

Since their apparition a couple of years ago, the crypto-currencies (Bitcoin, Ethereum and some 2000 others) were recently the subject of conversations. These high-volatility products can lead to material capital gains, which raises the question of their tax treatment.

As it is the case for capital gains on shares, the Belgian tax administration distinguishes three different tax qualifications to the capital gains realized at the occasion of the sale of crypto-currencies:

  • The capital gains are realized in the framework of the normal management of one’s private estate (good father’s management);
  • The capital gains result from speculative operations; and
  • The capital gains take place in the framework of a professional activity.

In case the capital gains are realized in the framework of the normal management of one’s private estate, i.e. with the objective of making one’s money grow on the long-term in a secure way, it should in principle not be taxed.

If the capital gains result from speculative transactions, i.e. when the tax payer is fully aware of the risky nature of the transactions, the capital gains is qualified as a miscellaneous income and is subject to a distinct 33% tax rate. Other criteria are relevant to qualify the capital gains as miscellaneous income, such as the use of credit, the small periods of time between the transactions, the regular monitoring of the exchange rates in order to sell at the higher rate possible, etc.

Finally, in case the transactions are performed with such a regularity that one can suspect that the transactions take place within the framework of a professional activity (i.e. the trader in crypto-currencies), the capital gains realized are qualified as a professional income and are taxed as such at the progressive income tax rates.

We can easily understand that capital gains realized in the framework of crypto-currencies transactions are analysed based on the factual background around the transactions. Faced with the raise of crypto-currencies transactions the Anticipated Decisions Services published a list of questions with the aim of helping the tax payer determining in which category he / she lies. This list is available on the website ruling.be.

Tax Consult follows the new measures taken and applied by the Authorities on a daily basis and is regularly in contact with the (tax) Administration. In case of question, do not hesitate to contact our team at info@taxconsult.be or directly your file manager in order to receive a tailor-made advice adapted to your situation.

 

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