Current position
In recent years, the Belgian Tax Authorities have been refining their stance on the taxation of cryptocurrency investments, aiming to offer clearer guidelines and increase legal certainty for taxpayers. As digital assets continue to integrate into mainstream financial systems, the need for a consistent and transparent tax treatment has become greater than ever.
Traditionally, the Belgian tax authorities differentiate between occasional cryptocurrency transactions and professional trading activities, with the tax implications varying accordingly (0% versus 25% up to 50%, plus social security). For private individuals managing their crypto investments under a ‘buy and hold’ strategy with minimal transaction activity, the gains are generally not subject to income tax. This aligns with the general Belgian principle that income from managing one’s private wealth typically remains tax-exempt, provided the activity does not reach a professional level. However, even outside any business context, the crypto gains realized by a private investor could in some cases be considered taxable at 33% when qualified as ‘speculative’ or abnormal.
To rule or not to rule?
Whether a certain type of income or set of actions qualify as normal asset management depends on the facts and circumstances. In this context, the Belgian Ruling Service has issued several rulings in 2024 that illuminate its perspective on managing the aforementioned criteria. The Ruling Service emphasizes that requests for a tax ruling on digital assets always requires an individual evaluation. Additionally, there are multiple favourable rulings indicating that capital gains on crypto-assets can be considered part of the normal management of private assets, thereby exempting them from taxes.
Change in Investment Strategy
In a Ruling of 16 July 2024 (Nr. 2024.0383), the applicant had invested in Ethereum (ETH) and various altcoins and initially engaged in numerous transactions, including many crypto-to-crypto swaps aimed at short-term profits. However, since 2022, he adopted a ‘buy-and-hold’ strategy, indicating a shift towards a long-term investment outlook, reducing the frequency of his transactions.
Since the applicant personally funded his investments without recourse to external financing or professional advice, and only a small percentage of his assets were allocated to cryptocurrencies, the Ruling Office concluded to a conservative approach in line with normal asset management.
For the crypto gains realized during the initial period of active trading, the applicant submitted a request for a voluntary fiscal disclosure, showing compliance with tax regulations.
Buy-and-Hold Strategy
In Rulings of 9 April 2024 (Nr. 2024.0136) and 21 May 2024 (Nr. 2024.0200), the Ruling Office comes to a similar conclusion. Both applicants primarily employ a long-term holding strategy, indicating a passive investment approach rather than active trading or speculation. Neither applicant engages in crypto-related activities that could be construed as professional or business operations (e.g., mining, using automated trading systems, and so on). In one case, the investment in crypto represented less than 10% of the applicant’s movable assets. While only relevant in one case, the use of hardware wallets to secure the cryptocurrencies, indicated a focus on long-term and secure holding of assets, according to the Ruling Service.
Bitcoin from Gaming
In a Ruling of 9 July 2024 (Nr. 2024.0452), the applicant has been involved in online gaming as a hobby, specifically acquiring in-game currency through regular gameplay. At some point, he sold the in-game currency to other players for Bitcoin, using an online platform not integrated into the game itself. This activity was not pursued with the intent of making it a business but rather evolved from a hobby. The BTC received from these sales were not traded or converted but only held as an investment. The applicant had no professional knowledge related to cryptocurrencies during his professional activities as a consultant. The Ruling Office concluded that the capital gains realized from the sale of BTC obtained through the sale of in-game currency, are tax-exempt.
Abnormal Management
In a Ruling of 23 April 2024 (Nr. 2024.0192), the applicant sought explicit confirmation from the Ruling Office that his gains should be considered taxable as ‘speculative’ income (therefore probably trying to avoid a taxation as business income).
The applicant conducted more than 50 transactions within a year and he also invested more than 50% of his total movable assets in crypto. This frequency and volume suggest a higher engagement level that might be seen as beyond the normal management of private assets.
Despite confirming that the gains are not professional income due to the applicant’s unrelated professional background and lack of systematic, organized trading (like using automated processes or trading on behalf of others), the decision still classifies the income as taxable at 33% due to the scale and nature of the transactions.
Also in cases where the applicant invested a relatively low amount in cryptocurrencies but carried out multiple transactions daily, the Ruling Office concluded that the capital gains are taxable.
Excessive Investing
In a Ruling of 8 February 2022 (Nr. 2022.0005), the applicant had invested more than 25% of his movable assets in crypto. In another case, an investment amounting to 28% of the total movable assets was sufficient to exclude the classification as ‘normal management’, even though the invested amount was entirely derived from an inheritance (if the cryptocurrencies themselves were inherited, the conclusion would have been different: Ruling of 26 April 2022, Nr. 2022.0217).
This decision raises the question whether the 25% threshold established by the Ruling Office, is arbitrary. Nonetheless, it advises caution for investors who have made substantial investments in cryptocurrencies. In cases where the applicant invested 30%, 40% or more of their movable assets in crypto, the conclusion by the Ruling Service was as expected.
Active Trading Program
In Ruling of 12 October 2021 (Nr. 2021.0859), the applicant developed software that conducts trading on his behalf using algorithms he developed. The software operates independently of the applicant’s direct control, performing transactions based on set criteria without manual intervention. The software engages in ‘spot trading’ and ‘future trading’ of cryptocurrencies, indicating a more sophisticated and active trading strategy than might be typical for private investors. This high frequency of trading (hundreds of transactions), automated by the software, suggested a level of activity that transcends normal private asset management.
The ruling reinforces that even hobbyist activities, when reaching a certain scale and using sophisticated tools, can alter the tax classification of the resulting capital gains.
Incrased Transparency
The upcoming EU-wide directives, such as the MiCA and DAC 8, will require crypto service providers to collect extensive information about their users’ transactions (KYC) and share it with the tax authorities of EU member states from January 1, 2026. This will lead to global transparency, allowing tax administrations (including the Belgian Tax Authorities) to gain detailed insight into your crypto assets held through exchanges. This, of course, increases the need for tax due diligence.
While applying for a tax ruling for crypto investments is not mandatory, obtaining one can provide fiscal clarity and security, helping you to navigate the Belgian tax implications of your digital asset portfolio. While applying for it may often be perceived as ‘asking the barber whether you need a haircut’, one should note that in a fairly large number of rulings it is concluded by the authorities that the capital gains remain completely tax-free. Therefore, it would not be correct to say that crypto gains are by definition almost always considered speculative by the Belgian Tax Authorities and are automatically excluded from the notion of ‘normal management’.