The tax rate differs depending on whether the investment is made in the normal course of private wealth management, a speculative investment or professional income.
The borderline between “normal” management of private assets and “speculative” investment is a question of fact. In the case law, it is generally examined whether the investor uses professional expertise, the number of transactions and their frequency. It is up to the tax authorities to prove that the investment is speculative.
We offer you our own online questionnaireto receive a free initial opinion on the possible taxation of your winnings on NFTs.
The distinction between the 3 taxpayers is clear here:
- NFT creators who are resellers (1st contributor) AND
- NFT’s buyers/resellers
are subject to the same rules of taxation to the Personal Income Tax (PIT).
The 2nd taxpayers, the platforms are in rule subject to taxation to the Corporate Income Tax set out below.
The NFT creator (1st taxpayer) receives two main sources of income:
- Proceeds from the sale of the NFT; and
- The proceeds from subsequent – and theoretically unlimited – resalesaccording to the will or general conditions of the exchange platforms.
Likewise, the 3rd taxpayers or buyers and resellers of NFT will receive a multitude of (re)sales proceeds.
We have no information on the consequences for the Belgian tax authorities of this multitude of (re)sales according to the articulation below (normal private asset management/miscellaneous income/professional income).
Will she consider that since they result from a “smart contract” and new technologies that do not require any positive act from the taxpayer, these capital gains subsequent to the original sale are not taxed (because they result from the management of a normally prudent and diligent person)?
Or on the contrary, will the tax authorities consider that the sale of a unique digital asset (the NFRT) in a highly speculative process opening the right to an unlimited number of resales and thus capital gains, subjects him to the treatment of miscellaneous income taxed at 33% (plus municipal surcharges) or even in some cases to that of professional income (50% marginal rate and social security contributions)?
In these new matters, it seems to us that more than ever the three sources of law must work together to contribute to legal security:
- The Law
- The Jurisprudence
- The Doctrine.
In the absence of specific regulations and jurisprudence decisions, given the abnormally long delays in the preparation of our legal proceedings, only the doctrine remains to enlighten the litigant, or rather the taxpayer in this case.
We therefore try to share our thoughts on the influence of these new technologies on the “trilogy” well known to tax specialists regarding the taxation of capital gains in natural persons (0%/33%/50% taxation).
In summary, we are of the opinion that the income of the creator/first seller of NFTs must meet the conditions set by the administration and the 3 sources of law to remain within the framework of the normal management of an estate AND that subsequent resales by the simple execution of the SMART CONTRACT :
- Do not irritate the qualification of good management of the private patrimony since simple use of modern technologies making automatic the right of continuation envisaged by the law for the authors of plastic works; and
- However, the resellers of NFTs are not subject to taxation as miscellaneous or even professional income other than by applying the same criteria as the original seller and therefore any seller of movable property (here below xxx).
But first of all, it is important to distinguish between INCOME and ASSETS.
