The Dutch government is seeking public feedback on proposed legislation requiring cryptocurrency service providers to collect and disclose user information to the tax authority, aligning with European Union regulations.
According to a recent press release from the Netherlands Ministry of Finance, the bill aims to enhance transparency around cryptocurrency ownership and combat tax evasion and avoidance.
The Ministry clarified that the regulations would not impose new obligations on crypto holders, who are already required to report their holdings to the Dutch tax authority, known as the Belastingdienst.
Data Sharing with Other Tax Authorities
Under the proposed legislation, the Dutch tax agency would share data collected from service providers about residents of other EU countries with their respective tax authorities, in accordance with the EU’s DAC8 crypto tax reporting guidelines enacted last year. This approach aims to simplify reporting processes for crypto service providers, as they will only need to report to the EU member state where they are registered.
Currently, Dutch cryptocurrency owners face taxation on their holdings in a manner similar to traditional investments. However, the Finance Ministry noted a lack of comprehensive insight among EU tax authorities regarding cryptocurrencies, leading to disparities in the financial sector.
“This bill marks a significant step in the taxation of cryptocurrencies,” stated Folkert Idsinga, the state secretary for tax affairs. He emphasized that through data exchanges, cryptocurrencies would become more transparent to tax authorities, helping to deter tax evasion and ensuring that European governments do not lose out on potential tax revenues.
Joining the Crypto-Asset Reporting Framework
In November, the Netherlands joined 46 other nations in adopting the Crypto-Asset Reporting Framework (CARF) established by the Organisation for Economic Cooperation and Development (OECD). The proposed legislation also includes provisions for sharing data with non-EU countries that have signed onto the CARF, including major nations such as the United States, the United Kingdom, Canada, Australia, and Singapore.
Stakeholders are invited to provide feedback on the proposed regulations by November 21, with the government aiming to present the bill to the Dutch House of Representatives in the second quarter of 2025.
In April 2022, De Nederlandsche Bank (DNB), the Dutch Central Bank, introduced registration requirements for crypto service providers and has since fined several exchanges for non-compliance. For instance, Binance faced a €3.3 million ($3.5 million at the time) fine for operating without registration after receiving a warning in August 2021. In June 2022, Binance announced it would cease operations in the Netherlands following unsuccessful registration attempts. Similarly, Coinbase was fined €3.3 million ($3.6 million) in June last year for failing to obtain the required registration before operating in the jurisdiction.
