Buy cryptocurrencies with your company or is it smarter to invest privately?

More and more companies want to do something with cryptocurrencies. The popularity of this digital currency has been on the rise for years, and companies don’t want to jump in too late. If you have your own business, you may have thought about investing in cryptocurrencies for business. Of course, you can buy cryptocurrencies like Bitcoin privately, but it is also possible to do it for business.

Tax authorities always see a difference between personal and business costs. As a business, you do not pay VAT on the goods and services you purchase for business operations. And so, other rules can also apply when companies want to buy cryptocurrencies.

In this article I tell you why you should invest in cryptocurrencies for business, and I delve into it. the rules that apply in the Netherlands to business investments† With the information you get from this article, you can draw your own conclusion about whether an investment in cryptocurrencies is better for private or business purposes.

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Why should you invest in crypto for business?

First, let’s look at some of the reasons you might have for investing in cryptocurrencies for business.

Anyone who trades cryptocurrencies naturally wants to make a profit on their investment. This can also apply to businesses. A business could ensure that they make even more profit by investing their already earned profits, for example, in cryptocurrencies.

As with a private investment, it can also be unwise to invest money that is really needed for other things. The price of cryptocurrency can always fall, and when cryptocurrency needs to be sold because payments need to be made, a company loses its investment.

2. Asset protection

Money can become worth less and less. In 2022 we saw that this could happen due to high inflation rates. The prices of products are becoming more expensive, so we have to pay more and more money to be able to buy the same thing. This does not only apply to individuals, but of course also to companies.

The products, raw materials and services that companies must acquire for their operations also increase in price due to inflation† As a result, the profit you earn may lose value if it remains in a bank account. This can be a reason to invest, for example, in Bitcoin. Of course, it is important that the selling price of this cryptocurrency is not lower than the purchase amount.

In the video below, you’ll learn more about how you could protect your wealth against, for example, inflation.

3. Plans to use cryptocurrencies within the company

We see more and more that companies want to do something with cryptocurrencies. For example, they may want to start accepting cryptocurrency payments.† This allows customers to pay for their products with, for example, Bitcoin or Ethereum. Of course, businesses will need to have a wallet in which they can receive crypto. There must also be crypto in this wallet, for example for refunds.

If you want to integrate crypto into your business in the future, that may be a reason to move wealth into crypto now.

Can you commercially invest in cryptocurrencies in the Netherlands?

In accordance with Dutch laws and regulations, you can invest in various investment products for trading purposes. Think stocks, indices, ETFs, precious metals, and of course cryptocurrencies. Different laws and regulations may apply to each investment product. That is why it is important to find out in advance about the products in which you want to invest. This is the only way to know if it is wiser to invest in certain products for commercial or private purposes. If you find this difficult, you can of course also contact an accountant who specializes in this.

Is it fiscally smarter to invest in cryptocurrencies for business or private purposes?

It is important to distinguish between an independent entrepreneur, such as a freelancer either freelancerand owner of a B.V. (Limited Company) or Nevada (Limited liability company).

Buy cryptocurrencies as an independent entrepreneur?

If you are an independent entrepreneur and would like to invest in cryptocurrencies, it does not matter if you buy cryptocurrencies like Bitcoin for business or private purposes. This applies to entrepreneurs with sole proprietorship and VOF. You will then need to pay taxes on this crypto in box 3.

Box 3 is the tax category where savings and investment funds are taxed. As a sole proprietorship owner, you are the legal entity within the business. This means that no distinction is made between private and commercial.

How much tax do you pay on cryptocurrency investment as a self-employed person?

In 2022, the tax-free part of box 3 will be €50,650† This means that you do not pay taxes on the first 50,650 euros of all your capital (savings and value of your investments). You pay taxes on capital that exceeds this amount:

  • Disk 0 (first 50,650 euros) – 0% tax
  • Disc 1 (1 euro to 50,650 euros above the exemption) – 0.5636% tax
  • disc 2 (50,650 euros up to and including 962,350 euros above the exemption) – 1.3536% tax
  • Disc 3 (from 962.351 above exemption) – 1.7143% tax

The moment you get a tax partner as a fiancé or co-owner of the VOF, the tax-free portion is €101,300

Would you also like an extra exemption can get for green investments† The exemption for green investments lies in box 3 to 61,215 euros per fiscal partner† You also get an additional tax credit for green investments. Please note that green investments are recognized by fiscally green funds. You can’t determine for yourself if something is a green investment.

Buy cryptocurrencies with a BV or NV?

The moment you decide to buy cryptocurrencies as BV or NV, it will be completely different from a tax point of view, because the BV or NV is then the legal entity. You will then have to put investments on the balance sheet as current assets.† Tax authorities convert the value of cryptocurrencies into euros, in order to determine a gain or loss.

When crypto investments have generated a profit, this profit is taxed by the tax authorities. The percentage of tax you have to pay is then considerably higher than the percentage in Box 3. You then pay the same amount of tax on this gain as you would on all other items that appear on the balance sheet as current assets.

What happens if you have a loss with a crypto investment like BV or NV?

In the most favorable case, you make a good profit on the cryptocurrency you have bought† You’ll then have to pay taxes on this, but of course there’s a chance you’ll have more money left over than before. However, it is not inconceivable that you would have a loss on the investment you have made as BV or NV. After all, cryptocurrencies are volatile and there are many people who lose money on their investment.

The moment you make a loss, the tax authorities see this as an ‘uncommercial investment’† The tax authorities then view the investment as a private spendingAnd that can have negative consequences. The loss is then not deductible from profitwhich means that in the worst case you will have to pay taxes for the part you have invested.

And then the blackest stage: an bankruptcy as a result of the failed investment. The bankruptcy will then qualify as a ‘result of mismanagement’. then you can be personally responsible for all debts you have built in business. Think about the tax debts, but also about the debts you may have with other companies.

With this information, you can probably determine for yourself whether investing in cryptocurrencies for business (on behalf of a BV or NV) is worthwhile.† Of course, you always have to weigh the pros and cons and then make a decision. If you are having trouble with this, you can always enlist the help of an accountant.

What if customers pay for my services and products with crypto?

Cryptocurrencies are increasingly used as a means of payment. Maybe you accept cryptocurrency payments yourself, or you have clients who only want to pay your company with cryptocurrencies. This can have several advantages, but of course it also raises many questions. Because what technically happens to taxes when you receive payments in cryptocurrency?

Receive payments as a freelancer

When you are self-employed or self-employed and clients pay you with cryptocurrencies, you pay taxes on this in the same way as with fiat currency† You will need to convert the value of the cryptocurrency to euros. This is done based on the exchange rate that was applied at the time of payment. Next, you declare the value of the crypto in euros in sales tax and income tax.

Receive payments as BV or NV

Even if you receive payments in cryptocurrencies such as BV or NV, you will need to transfer the value of these cryptocurrencies in euros to the tax authorities.† You then pay taxes on these euros, just like any other form of income.

Of course, the value of cryptocurrencies can fluctuate a lot. Therefore, it is important to think carefully about this from a tax perspective. Suppose you receive a payment of €1,000 in crypto on March 1. Then you must pay sales tax at the end of the month. If the value of this cryptocurrency has dropped to 600 euros, you still have to pay taxes on the 1000 euros.

It is also not wise not to report cryptocurrencies to tax authorities. Many people think that crypto is completely anonymous, when that is not the case at all. The video below explains more about what can happen if you do not declare cryptocurrencies to the tax authorities.

conclusion

It is allowed to invest in businesses in the Netherlands, for example in cryptocurrencies. When we look at the rules, we see a big difference between investments made on behalf of a sole proprietorship/VOF and investments made on behalf of a BV or NV.

As a self-employed person, you pay taxes on cryptocurrency investments† This is done in the same way as if you were to make such an investment privately – in box 3. This changes as soon as an investment is made from a BV or NV. The profit that is made must be placed on the balance sheet as a current asset, after which the company must pay taxes on the profit.

The moment a BV or NV has a loss on their cryptocurrency investments, the tax authorities will label the investments as “non-trading investments”.† Loss cannot be deducted from profit and, in the worst case, tax must be paid on the amount invested. If this leads to bankruptcy and is seen by the tax authorities as a ‘result of mismanagement’, the business owner may be held liable.

After reading this article, I hope you know more about What about trading investments in cryptocurrencies?† Do you want to know more about cryptocurrencies or other forms of investment after reading this article? Then ask your questions in our AllesAboutCrypto Facebook group and our experts will answer all your questions.

Do you have other questions related to cryptocurrencies? The easiest way is to search for your question in our Frequently Asked Questions. You can also google your question + “AllesOverCrypto”. You will then quickly jump to one of our other articles dealing with that topic, so you can learn about that topic more quickly.

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