Belgium going to tax Bitcoin speculation.

[Ansger]

Belgium is going to tax income gained from speculating on cryptocurrency. Posted below is an article in Dutch about the subject. The article comes from a low quality Belgian newspaper but the article is accurate in stating that Belgium is going to tax bitcoin income. 

Background

A student developed a program to automatically buy and sell bitcoins. The student in question got an income from this. The Belgian tax administration decided in a ruling that this income falls under "various income" (art 90, 1° WIB 92). This means there will be a 33% tax on the income. 

 

In the ruling the administration only decided on a case of Bitcoin speculation, but it stands to reason that the administration will also apply art. 90, 1° WIB 92 on income generated by speculating with other cryptocurrencies. 

 

It is important to note that the administration did not create a new rule. It simply applied an existing article of the tax code to a new situation (bitcoin speculation).

 

ARTICLE: https://www.hln.be/geld/speculeren-met-bitcoins-zet-dan-al-maar-33-procent-opzij-voor-de-fiscus~aa8441ad/

RULING: http://ccff02.minfin.fgov.be/KMWeb/document.do?method=view&id=6f2cb67c-4015-40fb-9d45-e54420e507b0&caller=1#findHighlighted

[elfensky]

From what I understand, the important distinction is that this applies to speculation. If you "invest" into bitcoin and let it be, it should be taxed differently (if at all).

What I couldn't find anywhere though is how speculation is defined.

[samcool55]

7 minutes ago, ElfenSky said:

From what I understand, the important distinction is that this applies to speculation. If you "invest" into bitcoin and let it be, it should be taxed differently (if at all).

What I couldn't find anywhere though is how speculation is defined.

Same here, there's nowhere defined what would be seen as a short-term investment or a long-term investment. Imo an important detail because only short-term ones are taxed.

[Ansger]

6 minutes ago, ElfenSky said:

From what I understand, the important distinction is that this applies to speculation. If you "invest" into bitcoin and let it be, it should be taxed differently (if at all).

What I couldn't find anywhere though is how speculation is defined.

It is not the speculation that is taxed. Belgium had a speculation tax in 2016 but abandoned it in 2017. The Belgian tax administration decided it was a "various income" as mentioned in art 90, 1° WIB 92. Various income is income generated outside of the professional activity coming from any performance, transaction or speculation. It is not the speculation itself, but the fact that income was generated that is taxed. 

 

also: only 50% of the generated income will be taxed as the other half is considered to be a deductible cost.   

[Ansger]

5 minutes ago, samcool55 said:

Same here, there's nowhere defined what would be seen as a short-term investment or a long-term investment. Imo an important detail because only short-term ones are taxed.

in the, now abandoned, Belgian speculation tax it was defined as something lik: shares sold on a stock exchange within 6 months of buying it. 
The speculation in article 90, 1° WIB 92 is not defined however. (at least not as far as i know). 

[KenjiUmino]

31 minutes ago, Ansger said:

It is important to note that the administration did not create a new rule. It simply applied an existing article of the tax code to a new situation (bitcoin speculation).

germany would have made a new rule for it ... because we don't have enough rules and exceptions to them already (sarcasm)

[Primefoxer]

As far i know this only applies if you are not a trader by profession and make short term investment trading deals on the regular(due to speculating the market).  It is the task of the investor to show that you are doing short or long tern investment.

[Ansger]

Just now, Primefoxer said:

As far i know this only applies if you are not a trader by profession and make short term investment trading deals on the regular(due to speculating the market). 

Yes. Article 90, 1° WIB 92 is only applicable if it is income generated by private transactions.

[Ansger]

22 minutes ago, huilun02 said:

Don't set Belgium as your country of tax? Ok got it

To be fair, Belgium is considered a tax haven in certain cases. Just not if you're a normal person. 

[Matu20]

Feels bad for people invested in crypto.

[leadeater]

This would already be taxed here, you have to declare all income sources. This only applies to conversion in to our currency but any cash income has to be declared, so you're tax free while it stays a crypto-currency.

 

You'll find this isn't uncommon, most people just don't know there tax laws not that I know mine all that much.

[System Error Message]

when it comes to money, governments go through hoops and have so many complicated laws in place so you pay. Unless you understand them all you end up paying even if it is not necessary.

[Ansger]

2 minutes ago, System Error Message said:

when it comes to money, governments go through hoops and have so many complicated laws in place so you pay. Unless you understand them all you end up paying even if it is not necessary.

No offense intended but i think you are wrong about why tax law is complicated. It is complicated because of entities (people and legal bodies) committing tax fraud, and the lobbying of interests groups. 
It would be relatively easy to make a rule: "every income is taxed at 20%. But it is harder and more complex to make a rule that professional income is taxed progressively. Besides that the lawmaker also wants to promote certain behavior like installing solar panels or going to your work by bike. Certain entities try to exploit those rules (like putting dummy solar panels on the roof or stuff like that. The lawmaker must close gates and make sure the law doesn't have unintended consequences. 

 

Modern society is really complex, so taxing it is also very complex. 

[System Error Message]

4 minutes ago, Ansger said:

No offense intended but i think you are wrong about why tax law is complicated. It is complicated because of entities (people and legal bodies) committing tax fraud, and the lobbying of interests groups. 
It would be relatively easy to make a rule: "every income is taxed at 20%. But it is harder and more complex to make a rule that professional income is taxed progressively. Besides that the lawmaker also wants to promote certain behavior like installing solar panels or going to your work by bike. Certain entities try to exploit those rules (like putting dummy solar panels on the roof or stuff like that. The lawmaker must close gates and make sure the law doesn't have unintended consequences. 

 

Modern society is really complex, so taxing it is also very complex. 

or charging tax where not applicable thanks to the very complicated system.

 

For instance where i am, everywhere that has a car park allows paying via some sort of rfid card system (like oyster in the UK)  that is national and can be used on tolls too, or by their own ticket system. the rfid card system costs 6% more (GST). This is an example of daylight robbery, where tax is applied where it need not be.

[AresKrieger]

3 hours ago, ElfenSky said:

From what I understand, the important distinction is that this applies to speculation. If you "invest" into bitcoin and let it be, it should be taxed differently (if at all).

What I couldn't find anywhere though is how speculation is defined.

In the US it would likely be the same regardless as capital gains is defined as sale of capital for profit, in belgium I don't have a clue, we could ask a someone from over there if they know but not everyone uses invests in stocks.

[Taf the Ghost]

3 hours ago, leadeater said:

This would already be taxed here, you have to declare all income sources. This only applies to conversion in to our currency but any cash income has to be declared, so you're tax free while it stays a crypto-currency.

 

You'll find this isn't uncommon, most people just don't know there tax laws not that I know mine all that much.

The little detail is that there is no way for central authorities to know you've made money from Crypto very easily. (That's why the US Government & Coinbase have been having legal war lately.) Crypto isn't a great black market transfer product, but it's a good tax dodge one. That's really what a lot of the government stuff is about.

[Taf the Ghost]

1 hour ago, AresKrieger said:

In the US it would likely be the same regardless as capital gains is defined as sale of capital for profit, in belgium I don't have a clue, we could ask a someone from over there if they know but not everyone uses invests in stocks.

In the States, it matters when you render the profit. Right now, Crypto is taken as assets, so it's a little different. (I'm actually not sure exactly which asset class it's taxed under, as there is dozens of them with slightly different tax brackets. And we just passed a massive tax reform, so something has likely changed.) So what matters is how long you've held the asset and when you render it to Cash.

 

Which is also why the more sly crypto investor could Exchange trade their crypto, remove it, then do a private-party transaction for some other good or currency. Pay your taxes, please, but I think you can see how it's also possible to get around a lot of the issue.

[leadeater]

41 minutes ago, Taf the Ghost said:

The little detail is that there is no way for central authorities to know you've made money from Crypto very easily. (That's why the US Government & Coinbase have been having legal war lately.) Crypto isn't a great black market transfer product, but it's a good tax dodge one. That's really what a lot of the government stuff is about.

If money goes in to your bank account the tax department knows, it's reported on by banks and interest earned on balance is taxed so they know by that what you are earning and calculate missing income tax. Don't mess with the tax people, do it properly or risk losing everything.

 

If you want to dodge taxes leave it as a crypto currency or open a foreign bank account .

 

Edit:

The important part has nothing to do with crypto currency, it's purely money entering your bank account not from your employer so not taxed so comes under cash earning laws that you must declare.

[Taf the Ghost]

18 minutes ago, leadeater said:

If money goes in to your bank account the tax department knows, it's reported on by banks and interest earned on balance is taxed so they know by that what you are earning and calculate missing income tax. Don't mess with the tax people, do it properly or risk losing everything.

 

If you want to dodge taxes leave it as a crypto currency or open a foreign bank account .

 

Edit:

The important part has nothing to do with crypto currency, it's purely money entering your bank account not from your employer so not taxed so comes under cash earning laws that you must declare.

Right, but someone has to actually look for it. If you get caught up in some other investigation, they'll probably find it, however they're not going to just randomly come across it. Unless it's multiple millions or something like that.

[leadeater]

5 minutes ago, Taf the Ghost said:

Right, but someone has to actually look for it. If you get caught up in some other investigation, they'll probably find it, however they're not going to just randomly come across it. Unless it's multiple millions or something like that.

Random audits are a thing, you often don't even know you've had one. Also they have automated systems that look for certain indicators, so while the probability of being caught is low it's there and gets higher the more you put in to your account unaccounted for.

 

Had a family friend lose everything to the tax department, self employed business etc etc fucked up long story short and they took the house & car etc.

[Tech_Dreamer]

not a good idea imo , since price is severely fluctuating moment to moment you cannot stamp a particular amount to be deducted as tax,plus the government should provide services for goods exchange for the crypto in general in a real world environment if they're taxing something like this which they themselves are not involved. it kinda seems a bit fraudulent practice when it comes down to it . it's like they are searching an extra pocket to dig out money from just like a mugger. until government actually does something inbetween this & real world trade environment extensively. it shouldn't be done or enforced .

[N0rm]

The point of cryptocurrencies is the public ledger, it couldn't be worse for tax evasion. Even a private investigation is able to tie transactions to people.

 

I don't think it should be surprising that income from cryptocurrencies is still income and is taxed as such.

 

Regarding services provided in return, guess what prevents this outcome.

[leadeater]

5 hours ago, N0rm said:

The point of cryptocurrencies is the public ledger, it couldn't be worse for tax evasion. Even a private investigation is able to tie transactions to people.

 

I don't think it should be surprising that income from cryptocurrencies is still income and is taxed as such.

 

Regarding services provided in return, guess what prevents this outcome.

Usually it's not an issue of knowing it's happening but rather depending on tax laws if they are allowed to tax it at all, that is after all why people use tax havens.

[dfsdfgfkjsefoiqzemnd]

23 hours ago, leadeater said:

If you want to dodge taxes leave it as a crypto currency or open a foreign bank account

Or buy stuff online using Bitcoin rather than a fiat currency.  There are a number of (reputable) retailers in other EU countries that accept Bitcoin. 

 

Funnily enough, in June I went to my local tax office to let them fill in my tax papers and while I was there I decided to ask the employees there about how they tax Bitcoin-related income.  None of them even knew what Bitcoin was. 

Of course with the recent rise and fall it's all over the news with officials and the head of the central bank warning people about how dangerous it is etc, so they're probably a little more clued in right now.

 

 

 

 

Governor of Belgian central bank calling Bitcoin "not a currency"

 

How the hell do you tax something that the head of the biggest financial institution doesn't consider a currency?

[Mihle]

By Norwegian tax law income form buying and selling crypto with a profit is exactly the same as buying stock and then selling with a profit. Or gold or anything for that matter. It is taxed. As it should be.