In recent weeks, the exponential rise in prices of crypto currencies has again been a hot topic in the media. The question remains: "Are any capital gains realized taxable or not?". Although crypto coins are starting to gain an important place in the trading market, it can be seen that there is little or no Belgian or international legislation on this subject. A brief explanation with the state of affairs.
1. Income Tax
The crucial question of when the proceeds of one or more transactions should be taxed is and remains a question of fact. In the Income Tax Code, a provision can be found in this regard, namely the 'normal management of private assets'. Indeed, when private assets are managed normally, no tax is due on capital gains.
To determine whether trading in crypto currencies is "normal management," we must look at (i) speculative nature, (ii) frequency, and (iii) prudent management. The burden of proof is always on the tax authorities.
"Speculative" can be defined as taking a great risk with a view to large profits or a chance of heavy loss. This is an important factor in determining whether or not tax is due. If there is speculative management, the taxman may consider it to be miscellaneous income.
In addition, the frequency of transactions and whether you are intensively engaged in amassing profits through the purchase and sale of Crypto Coins are considered. If a cryptotrader "trades" on a regular basis and acts professionally in doing so, these profits can be qualified as professional income.
Finally, a good family man should diversify. This is the case when, for example, you invest only a portion of your private assets in crypto currencies. The main focus of this criterion is whether risks are taken that could jeopardize the private assets. If this is the case, then here too the tax authorities can consider any capital gains to be miscellaneous income.
2. Relevant prior decision
In a prior 2017 decision, the question was whether capital gains on "Bitcoins" were taxable as professional income, miscellaneous income or not at all. The applicant in question had developed a tool to automatically make purchases and sales of "Bitcoins." In this case, the Ruling Commission ruled that the transactions were speculative in nature so they should be taxed as miscellaneous income (33% + municipal tax).
3. Valuation today remains primarily a factual matter
Anyone who is involved in the purchase and sale of crypto currencies on a daily basis and makes profits on these will, in principle, be taxed on these at the progressive personal income tax rate.
If there is no daily activity, then there is a chance that the tax authorities may consider the capital gain to be taxable if there is speculative management or if there is a violation of the principle of managing as a good family man. In this case, the capital gain will be taxed at 33%.
However, whether the capital gains/profits achieved will be valued remains a question of fact where the burden of proof lies with the tax authorities. But what is a certainty is that crypto currencies have the full attention of the tax authorities today.
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