Tax on NFTs in the Netherlands
There is a big chance that you have already noticed the hype about NFTs (non-fungible tokens). But what exactly is such a non-fungible token? Without going too deep into the technology, here’s a quick definition:
An NFT is a unique, irreplaceable, digital certificate of ownership (such as a picture) linked to blockchain technology. So NFTs are built upon the same technology as cryptocurrency. In fact, you need a crypto wallet in order to buy NFTs.
An NFT is seen by many as the (digital) art of the future, emerging art. But don’t get us wrong, it’s not just art lovers that are interested in NFTs. By a large group, this new trend is seen as an investment. In this case, an NFT is bought to resell it for a significantly higher price. We previously wrote an article about crypto and tax, but what about NFTs and tax in the Netherlands? We will go further into this in this article.
Are NFTs similar to art?
In the Netherlands, art belongs in box 3 (savings and investments). In box 3, several items are exempt from tax. Like art, to encourage the possession of it. The intention of purchasing art is important when determining the exemption. Do you buy a painting to hang in your house? Then, this belongs to private property and is exempt from tax. Is the art mainly held as an investment? Then, it will be taxed in box 3.
Many people see NFTs as digital art. In fact, we cannot deny that an NFT functions in the same way as a work of art. Just like works of art, NFTs are collected and unique, which is giving them high status and can increase their value significantly.
Are NFTs taxed the same as art?
Whether an NFT has the same taxation as art is unfortunately not entirely clear at the time of writing. The Dutch tax office (Belastingdienst) has yet to decide whether they will fully go along with this. However, the Dutch tax office is not allowed to judge whether or not something belongs to art. And precisely because the functions of art and NFTs are the same, we believe that the Dutch tax office has to go along with it. This means we think that your collection of NFTs could be exempt from tax.
Produce and sell NFTs: box 1
Above, we talked about buying NFTs, but such an NFT also has to be produced. When you produce and sell NFTs, you have to pay Dutch income tax on the profit you make on them in box 1 (income from work & home ownership). Of course, you can deduct the business costs from the revenues. An example of business costs is the transaction costs (also called gas fees).
We are happy to help!
Did you buy and/or produce NFTs, and are you unsure how to submit this in your Dutch income tax return? We are more than happy to help you with this! Please, contact us using the details mentioned below.