Electronic tax

Are NFTs non-taxable assets?

Are NFTs non-taxable assets? This might not be your first thought if you’re buying a non-fungible token (ownership of a digital product, album art, or concert tickets). But when it comes to the Dutch tax authorities, the central question is whether you bought it for love or as an investment. blue umbrella Explain.

Normally, cryptocurrencies are considered an asset, so Box 3 tax will apply. On January 1, at the beginning of the tax year, the value of what you own is assessed, but in box 3 there is an interesting exemption: if people buy art, then it is excluded in as active.

These days, however, we have what many people would consider a new art form: NFT. I think we can argue that if you buy an NFT, and you buy it with the same thought process as when you buy art, you wouldn’t have to report it on your tax return, even whether you make a profit or a loss. in the future.

Box 3

The future of Box 3, where you declare your investments, wealth and savings, is currently in question. A court ruling last year said savers were being taxed at unfair levels given low interest rates. The tax has therefore been suspended and the government is drawing up new plans. However, it is expected that assets will still be taxed in some way in the future, and various accountants have raised questions about what this means for digital property.

In Blue Umbrella’s view, if you want to assert that you purchased an NFT as a work of art, you will need to be prepared to demonstrate the subjective conditions of why it was an art purchase. art and not an investment.

The central idea is that if you bought it as an art purchase, we would say it should be excluded, but if you bought it as an investment, then it should be included in your tax return.

Art and NFTs as a story

Before buying an NFT, here is a tip: state in advance the reasons and purpose of buying the NFT. For example, you might want to be identified with the jpeg or photo you purchased because you’d like to use it as your profile picture – and it’s part of your artistic way of expressing yourself publicly. Art is always subjective, so it’s about your story.

If you bought the NFT for love and not for money, so to speak, any gains you make will not be taxable if you sell it (nor will you be able to offset any losses). But currently, this class of art assets – much like your car or the contents of your home – is treated differently than assets such as second homes.

You should, however, keep an eye out for developments. Box 3 is currently under review and it is unclear whether the Dutch government will review the tax exemption for art – whether you can hang it on your wall and enjoy it with a whiskey and a cigar… or s is an NFT in your digital wallet!

Still have questions about buying NFT and what it will mean for your taxes? If so, contact the experts at blue umbrella. Their experienced and professional team offers comprehensive tax assistance to expats and internationals in the Netherlands.