Transcription
Hi, I am Bart from Satoshi Radio and today I am going to tell you something about taxes and Bitcoin. Because yes, we always get a lot of questions about that from beginners, questions like, what exactly does it fall under? Do I have to declare it? At what amount? Yes, up to the more advanced questions. And then it's of course mainly about, yes, how does the system look, right? How does wealth tax look in the Netherlands? And still important, how will it look in the coming years? In this video, I will take you step by step through the history and the current state of wealth tax in the Netherlands. We will look at how the system used to work, how the system works now, and why the Supreme Court has rejected it, right, why the change must come and, uh, how it will look in the future. And then of course, especially for your Bitcoin and cryptocurrency holdings. For all these, yes, states, let's say, how the system has worked, I have a calculation example, so you can follow along, yes, how much tax you have to pay and how that works. Well, I would say let's not talk any longer. Let's just start quickly. I'll grab the iPad and then we'll get started. Yes, I've just made a timeline here on the iPad to show you, yes, how does wealth tax in the Netherlands look like? Right, what is its history? Well, we started in 1965 with the Wealth Tax Act 1964. Made in 1964, it came into effect in 1965. It existed until 2001, because then we got the Income Tax Act 2001. What happened there is actually that wealth tax officially disappeared, and that the taxation of wealth fell under income tax, the box system. We'll come back to that shortly. We still have that system at the moment. Only the Supreme Court, the highest court in the Netherlands, has put a bomb under it in 2021. And they said: "Yes, this is not good at all. This doesn't work at all as it should. You, the government, have to do something about it. It needs to be overhauled." Well, and they are now working on it, and probably, as it looks now, at least that is the hope they have, from 2028 we will move to the Actual Return Act, where quite a lot will change.
Okay, we'll just start with the Wealth Tax Act 1964, because it's quite simple. As I said, from 1965 to 2001, a direct annual tax on net wealth. That is assets minus debts that a person has above a tax-free allowance, where the composition of the wealth did not matter. So it's very simple. Whether you had 100% of your wealth in stocks or 100% of your wealth in savings or in something else, it didn't matter. The rate was simply 0.7% and the tax-free allowance was 90,000 guilders. And if you were married, it became 113,000. Let's take a calculation example for that. I've done it this way. 100,000 guilders in savings, 100,000 guilders in stocks, and 50,000 guilders in debt. The tax-free allowance, as mentioned, is 90,000. The rate, tax rate 0.7%. And I've assumed the year 1995, because I could find these things back then. The rate and the tax-free allowance. Step one, simply calculate the total assets. Well, in this case, 100,000 guilders in savings, 100,000 guilders in stocks. So total assets are 200,000. Step 2. Determine the net wealth. Well, net wealth is your total assets minus your debts. So in this case, 200,000, as we just calculated. Minus 50,000. Then you get 150,000 guilders at that moment in net wealth. Well, then we have the tax-free allowance. Step 3, apply the tax-free allowance. 150,000 minus the tax-free allowance of 90,000 guilders. You have left. 60,000 guilders in taxable wealth. Well, step 4, finally pay the tax to be paid. 60,000 times 0.7%. Then you have to hand over 420 guilders to our friends at the blue envelope. This was 1964. Simple, straightforward. Yes, nothing more to do, I would say. Have no use for it at all now. But it's important to know how this worked, because this was really wealth tax. There was no look at returns at all. It was just total wealth. There's a rate on that, and you just have to pay it. Whether your wealth has become worth more or less, it doesn't matter. It's just the total wealth, and you pay tax on that.
Alright, then we have the Income Tax Act 2001. That's a different law. I have it here. That's, uh, yes, from 2001 to 2016, right? Well, it started in 2001, and in 2016 it was changed for the first time. It's a levy on, and this is important, a fixed fictitious return on wealth above the exemption. Tax was paid on this assumed return, regardless of the actual composition of the wealth. So it was simply said, we also call that a presumed return. You simply make a 4% return on your wealth, right? I have Minister Zalm here who says: "Every fool can make a 4% return." Right, that's how it was thought of at the time. That wasn't strange either, because in the beginning, in 2001, when that law came into effect, it was also quite simple to achieve a 4% return, for example, with government bonds. There was still a positive savings account, savings interest, 4% return, right? It was said that you could at least achieve that, and based on that, we will calculate tax. So what you have is you have a certain amount of wealth. It is said: "You probably make a 4% return on this. We'll base it on that. That results in an amount in euros, and on that amount you pay 30% tax." So that's the new system. That is, of course, different from the system we had before. That Wealth Tax Act 1965. Yes, just briefly, how does that work with those boxes? Yes. Yes, that's not that difficult. I can't get this off my screen. Well, anyway, then we'll have to deal with it. It's income tax. Box 1: income from work and home. That's the tax that's on your payslip, right, for example, or that you have to file once a year as a freelancer, your income tax. Box 2: income from substantial interest. That's mainly if you have a private limited company, for example, right? If you are a shareholder, you own more than 5% of the shares in a company. So for many people, this is a bit of a strange box that doesn't really apply. And then we have Box 3: income from savings and investments. Bitcoin falls into Box 3. The Supreme Court has also confirmed that. Your stocks also fall into it, your savings fall into it, your second home if you have one falls into it. This is your income from your, well, savings and investments. Quite clear. You can also see that if you look here at the tax authorities. If you are going to fill it in, it's also listed there, right? I'll tick it here. You tick that. I have crypto, you say. And at the bottom you have to indicate: "Well, are your assets above €38,000?" If so, you will also end up in this screen, which I have here. And there you will have to fill in that you have bitcoins, €50,000 for example. Well, anyway. And then it will be calculated whether you are below the tax-free threshold. If so, you don't have to pay tax on it. If not, if you are above it, then you have to pay tax. But we'll come back to that in the calculation example, because we have it here. Income Tax Act 2021. The, yes, that's of course wrong. It should be the Income Tax Act 2001, as I also neatly indicated before. Mistake, 2001, ladies and gentlemen. The rest is correct, but Income Tax Act 2001. Back to the video. Period 2001 to 2016. It was quite simple. We have there, I've taken the data again, €100,000 in savings, €100,000 not in stocks, but in Bitcoin, of course. That was possible in this period. €50,000 in debt. Taxable wealth, roughly €24,000, and that return, fictitious return of 4%. And a rate of 30% tax rate. I've taken the year 2016, because these things differed per year. So, well, for completeness, I'll add that. Total assets, again, very simple. Step one. Oh, that's the wrong one. I need this one. That's €200,000. €100,000 savings, €100,000 Bitcoin. Step two, net wealth. Well, the debts are deducted from that. I haven't calculated with threshold values. They are sometimes included. Sometimes the first €3,000 of debt is not deductible, for example. I've omitted that here because it's not that relevant for the calculation example in this case. So €150,000 is your return base. Taxable wealth can be deducted from that. That was in 2016. So those 24,437. 437 left, taxable wealth of €125,563. Then we have to calculate the return, the presumed benefit. We do that by multiplying that taxable wealth by the assumed return of 4%. Well, you get €5,000. €5,025.20. And you pay tax on that, which was 30% at the time. And then you have a tax amount of €15,006.67. That's what you had to pay in 2001. Very simple. In itself, a simple system, actually. But and now comes the big but. Yes, it started to pinch a bit around 2017, because yes, those savings rates were certainly not 4%. They were 0%, 1%, and yes, in 2008 I also didn't make a profit on my stocks. I made a loss, and I'm still being taxed on 4%. So yes, people were not satisfied with that. So in 2017, something was already changed a bit in the system, right? Something was added. Something was added. A levy on the fictitious return. That remains the same. It depended on the size of the wealth. That's new. We didn't have that before. Divided into brackets. Maybe you still know them. Brackets were introduced with the presumed mix of savings and investments. This system was later declared unlawful by the Supreme Court. Yes, we'll come back to that shortly. So the presumed return was not 4%. No, it was 1.818% for the lowest bracket. That was up to €50,000. Up to the highest bracket, above a million, it was about 5.5%. So it was assumed: "Yes, in that lower bracket up to €50,000, yes, that's savings for most people." And the bracket from €50,000 to about a million, yes, then people might do a bit of a fifty-fifty split. Half savings, half stocks. And above that, above a million, it's 100% stocks. So everyone is dealing with stocks there. Yes, it was sort of, yes, determined like, okay, this will be your wealth mix, and if that's your wealth mix, then this will be your return. Yes, it's a bit of guesswork. Especially if you do that for all those millions of taxpayers with one system. The tax-free allowance in that period was around €50,000. Well, we have another calculation example. Again, the total assets are the same, right? We're still assuming €100,000 in savings, €100,000 in Bitcoin, €50,000 in debt. Well, the tax-free allowance in 2022 was around €50,000. And here we have that return with those brackets. I have them here. And bracket 1 is up to €50,000. Well, 1.8%. Bracket 2 is from €50,000 to about a million, it's 4.3%. And bracket 3, from a million and everything above that, it's 5.5%. Well, let's go again. Total assets, 200,000. We know that's the same. The net wealth again, minus that €50,000, comes to 150,000. Tax-free allowance. That's deducted. And that was €50,000 and 600, €50,650 in this case. You get a ton left. Roughly €99,350. Taxable wealth. Now it changes compared to the period 2001 to 2016. Yes, we have to divide it over the brackets and thus calculate the presumed benefit again. We did that just now, but yes, we first have to divide it over those brackets. So we have a total taxable wealth of 99,350. The first 50,651 goes at a return of 1.8%. You get a benefit of €924. Then there's 99,350 minus 50,651, which is 48,699 left. That falls into bracket 2. That's this one. Bracket 2 has a return of 4.3%, 4.4%. You get €2,000 or €2,126.20. You add those two together, you sum them up, and you get €3,050.40. That amount, step 5, you multiply by the rate, tax rate 31%, and you get €945. Well, this was all still quite simple. Except that the tax authorities said, or not the tax authorities, sorry, the Supreme Court said to the tax authorities and to the government: "You get an insufficient grade. All the savings tax is in violation of the law." Yes, the Supreme Court decided that. This system is an infringement. We have a prohibition of discrimination, so the infringement on the right to property in the Human Rights Convention. Well, then you're not doing well. You understand that too. That had a significant impact. Two things had to happen: legal redress, so those who were disadvantaged, they get money back or received money back for the period 2017-2022. And it was said: "Yes, we need a new system, government. So go and fix something. We need to work with actual returns, because that was the big point here. It was, yes, unfair, unlawful, says the Supreme Court, that the return, the presumed return with which calculations are made, so that 4%, for example, yes, if the savings interest is 1%, then I pay 3% too much, and that's not allowed. So a new system must come. But yes, that's not done just like that, a new system. So we got the bridging law. That was the first system, or at least it's the current system we're in now. That's a temporary levy on fictitious return. So that fictitious return still exists, based on someone's actual composition of wealth. So you now have to indicate yourself, okay, I have an X amount of savings, I have an X amount of stocks, I have an X amount of debt, actually. Those are the three buckets where it has to fall. But we still have to deal with a fictitious return. Well, it's a direct response to the Christmas ruling. That's that, uh, that decision of the Supreme Court from 2021. So the presumed return still exists. It varies from 1.44% to 5.58%. The rate in 2025 is 36%, and the tax-free allowance is €57,000. There is also a counter-evidence regulation. That's literally happening now. That came forward in July 2025. That was again the Supreme Court that came around the corner. And they said: "Hey, you've changed it now. Now it's good." Oh no, not yet. "It's still not good," said the Supreme Court. They said on June 6, 2024, that it all had to be different again. Namely, that the bridging law is also not good, because they are still calculating with a presumed return, right? That's still in there. I just showed it here. It's here. That presumed return is still 1.44% to 5.58%. It depends on which asset class it concerns. So there the Supreme Court said: "Yes, you have to do something with that." So there is now also a counter-evidence regulation. Well, I'll leave that out of consideration for this video. But well, that's also happening now. It's possible that you will receive a letter from the tax authorities in your mailbox, and then you might still get money back.
Alright, how does it work at the moment? Well, yes, that's a bit more complex than the previous calculations. And that's also a bit of the core of this whole story. It's getting more complex each time, what they are doing now. The government, forced by the Supreme Court. We have the data again, right? We have again €100,000 in savings, €100,000 in Bitcoin, €50,000 in debt. Well, the tax-free allowance is €57,000. And the returns, preliminary, that's for 2025, but it will be in that direction. For banks, savings accounts, it's 1.44%. Other assets, including Bitcoin, so 5.88%. And debts are at 2.62%. I've now included the threshold for debts because this is the system we are in now. It's important to be a bit more detailed. €3,800 and the rate is 36%. Then let's go to the calculation example. I'll make it a bit bigger. Look, what you first have to do is calculate the taxable return. Well, we'll do that. Bank deposits, 100,000 times 1.44% comes to 1440. Bitcoin, 100,000 times 5.88% comes to 5880. The deductible debt, well, that's 50,000 minus 3,800, that's 46,200 you get. And the return we make on that, that's the minus amount. So the costs we actually incur is 46,200 times 2.62%, and then you get €1210.84. So the taxable return. Well, first add the first two and then minus the debts, we get 61956 here. Then the return base. Assets minus debts. Well, the assets are 200,000, right? 100,000 + 100,000. Deductible debts are 46,200. And then we get a return base of 200,000 minus 46,200, which is 153,800. Okay. Step three, calculate the savings and investment base. That's the return base we just calculated minus the tax-free allowance. And that was €57,684. So we do 153,800 minus €57,684, and you get €96,116. On to step 4. Calculate your share in the return base. And that is the savings and investment base divided by the return base. Well, yes, we've calculated all that, so that's great. The savings and investment base, we calculated that in step 3. That's 96,116. We divide that by what we calculated in step 2. The return base, 153,800, and you get 0.62494. You multiply that by 100, and then you have the percentage, in this case 62.494%. We have that here. We're almost there, people. We're almost there. Step 5. Calculate your benefit from savings and investments. That's the taxable return multiplied by the share of the return base. Well, we calculated the taxable return in step 1. That was 619.56. And we multiply that by the 62% we just calculated. And then we get €3818.11. Last step 6. Calculate how much tax you have to pay in box 3. And we do that by multiplying the rate of 36% by the benefit from savings and investments from step 5. And then we get a final result of €1374.52 in tax that we have to pay. Well, it can be that simple, people. And this is the system as it works at the moment. This is just how you do it. Yes, in principle, you just fill it in in those forms that the tax authorities have. I'll grab them again here. Yes, in principle, everything I just did, you just fill it in, and then it calculates it for you, right? It's not rocket science. I don't want to say it's easy, especially because it changes so often. But well, this is, this is how it works.
Alright, then we'll go to the future, 2028, because yes, it's called a bridging law for a reason, what we're in now. In 2028, we'll get the Actual Return Act. Yes, and then quite a few things will change. The planned levy is based on the actual return achieved, where both the direct income, so that's important, direct income such as interest and dividends, and the actual value change, that's indirect income, also called wealth growth, and capital gains for certain categories, will be taxed. Yes, that's different. So it's no longer the case that the tax authorities say, okay, we think you have about this much savings and this much stocks, and we'll levy a presumed return on that. No, both disappear. You get an actual return, and you have to fill in exactly what you have. How much Bitcoin you have, or how many stocks you have, or how much savings you have. So yes, the whole system is being overhauled. We also no longer have a key date, because that's important. All those previous systems had a key date, January 1st, then you do this, right? You take all the data we use for calculations. So for example, those calculation examples we had here. This is on January 1st, or this is on January 1st, or this is on January 1st. On January 1st, I have €100,000 in Bitcoin, €100,000 in savings, and with that you do your tax return. Yes, that disappears. So now you will look at the whole year, in principle. So from 2028, this is still in the planning stages, right? So I'm making quite a few assumptions here. But in principle, what you will get with that wealth growth is tax on unrealized gains. Well, you also had that in those previous systems from 2001, you know, you had to pay in euros on the Bitcoin or on the stocks you had without realizing it. Only it was a very favorable and very simple system. Yes. And now if you make significant profits with Bitcoin, you pay 36% on your capital gains. So, let's say Bitcoin goes from a hundred thousand to two hundred thousand. Yes, then you have to pay 36% tax on €100,000. €36,000. Yes, that's much more than in all the years before combined. I've also made a calculation example for this. Then it will become a bit clearer. I've done the same again, right? Single person, €100,000 savings, €100,000 Bitcoin, €50,000 debt. The tax-free allowance, that tax-free threshold of €50,000, that will be replaced by €57,000 as tax-free income of 100. And you will naturally look at actual returns. So I've assumed that I'll get a 2% return on my savings that year. So €2,000. Bitcoin and my other stocks, you name it. In this case, Bitcoin 10%, right? So on €100,000 that's €10,000. And the debts, they have a negative return, an interest rate of 4.5%. So that's €250 in this case. Tax rate 36%, and the year is 2028, I've assumed. If you look here, we have indeed the calculated actual return per category. Well, the total actual return is then 12,000, what I earned. At least on paper with that Bitcoin, because I haven't sold them. And from that, the interest is deducted, and then you get 9750. We apply the tax-free income. Well, that's 1800. That can also be deducted. You get 7950. And then we have to pay the tax. 36% times that small €8,000, and you get 2862. Look, and you might think now: "Yes, Bart, this actually looks very simple. Simpler than the previous one." Yes, that's true if you have those figures in step 1, but calculating your return, yes, that's quite a lot of hassle. And that's why it's taking so long, because all brokers, all exchanges, all banks, and the tax authorities themselves have to build this entire infrastructure. So that's really a hassle. Yes. And what's also annoying, of course, is, yes, profit on unrealized gains or tax on unrealized gains. So you are actually forced to sell parts of your Bitcoin to be able to pay your taxes. Yes. And especially if Bitcoin rises sharply, those are significant amounts that can take a bite out of your stack. Well, and if Bitcoin then goes down again, look, in euro value, you can offset your loss in subsequent years. So in itself, that's fair. Only you will see that your stack is constantly shrinking. And that's quite annoying. We'll come back to that in a later video. Because I think that's enough for today. This is quite a lot of information. Yes, I hope it's a bit clearer this way. In any case, what you need to do now, in the current system, how that works, where you fill in your Bitcoin and how much tax you pay on it. So, so yes, it's a bit of an introduction to what wealth tax in the Netherlands looks like, right? And what system we were in, where we are going. I hope you found it useful. Please let me know if you have any further questions. This is more of a first episode in a series that we want to make if there is interest from your side. Yes, so please let us know. Then we can get started with it. For example, with a video about the system from 2028 or just how do you fill in your tax return if you have Bitcoin, right? Or should we do more calculation examples? Well, please let us know. For this week, this is more than enough. I'll see you next week in a new video. Later. Yo.