Dutch Tax Authority Invites Public Feedback on New Crypto Reporting Legislation

The Dutch government is taking significant steps toward enhancing transparency in cryptocurrency transactions by seeking public input on a proposed bill. This legislation aims to require crypto service providers to collect and disclose user information to the Dutch tax authority, aligning with European Union regulations. The initiative is part of a broader effort to combat tax evasion and avoidance practices within the rapidly evolving crypto landscape.

According to a recent announcement from the Netherlands Ministry of Finance, the primary goal of this bill is to provide clarity on cryptocurrency ownership. By doing so, the government hopes to ensure that all crypto holders are accurately reporting their holdings, thereby increasing tax compliance. The Ministry emphasized that the proposed regulations would not impose new obligations on crypto holders, as they are already required to report their assets to the Belastingdienst, the Dutch tax authority.

Data Sharing and Compliance with EU Regulations

Under the proposed legislation, the Dutch tax agency will be empowered to share data collected from crypto service providers with tax authorities in other EU nations. This move is in accordance with the EU-wide crypto tax reporting guidelines established in DAC8, which were enacted last year. The intention is to streamline the reporting process for crypto service providers, who will only need to report to the EU member state where they are registered.

• Key Features of the Bill:
  • Mandates crypto service providers to gather user information.
  • Enables data sharing with tax authorities across the EU.
  • Aims to enhance transparency and reduce tax evasion.

Currently, Dutch cryptocurrency owners face taxation on their crypto holdings similar to traditional investments. However, the Finance Ministry has noted a significant gap in understanding among EU tax authorities regarding cryptocurrencies. This lack of insight has created an imbalance in the financial sector, prompting the need for clearer regulations.

Folkert Idsinga, the state secretary for tax affairs, remarked, “With this bill, we are taking an important step in the taxation of cryptocurrencies.” He emphasized that through data exchanges, cryptocurrencies will become more transparent to tax authorities, ultimately deterring tax evasion and ensuring that European governments do not miss out on potential tax revenues.

International Cooperation and 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). This framework aims to standardize the reporting of crypto assets across jurisdictions, facilitating international cooperation in tax matters.

The proposed legislation also stipulates that data collected by crypto service providers will be shared with non-EU countries that have signed onto the CARF. This includes major economies such as the United States, the United Kingdom, Canada, Australia, and Singapore. By fostering collaboration among nations, the Netherlands aims to create a more cohesive approach to cryptocurrency taxation.

Stakeholders, including crypto service providers and the general public, are encouraged to provide feedback on the proposed regulations by November 21. The government plans to present the finalized bill to the Dutch House of Representatives in the second quarter of 2025, marking a significant milestone in the country’s regulatory framework for cryptocurrencies.

Regulatory Landscape and Recent Enforcement Actions

The Dutch Central Bank (DNB) has been proactive in regulating the crypto sector, having introduced registration requirements for crypto service providers in April 2022. Since then, the central bank has imposed fines on several exchanges for non-compliance with these requirements. Notably, Binance faced a fine of €3.3 million ($3.5 million at the time) for operating without registration after receiving a warning from the DNB in August 2021. Following this, Binance announced its decision to cease operations in the Netherlands.

Similarly, Coinbase was fined €3.3 million ($3.6 million) by the DNB in June last year for failing to obtain the necessary registration before operating in the jurisdiction. These enforcement actions underscore the Dutch government’s commitment to ensuring compliance within the crypto industry and protecting the integrity of its financial system.