Venture Capital Invenstments in Cryptocurrency

 Among other positive developments for the blockchain space, 2017 was the year of the ICO (Initial Coin Offering). As public interests in cryptocurrencies heated up towards the latter half of the year, newcomers with fresh investment capital fanned the flames of the already white-hot fundraising model.


ICO vs. VC: Two Sides of the Same Coin 

Throughout 2016-2017, initial coin offerings became the default method for cryptocurrency projects to kick-start their revenue stream. For a time, the ICO model was stupid lucrative, for both entrepreneurs and investors. If you had invested in, say, NEO’s ICO (formerly Antshares), you’d be up nearly 280,000%, and even the most modest ICO returns, as with Lisk, come out to 19,000%.

And these profits weren’t limited to the investors. According to Coinschedule, ICOs attracted $95mln in 2016, only to quadruple this figure to $3.8bln in 2017. Even though half of last year’s ICOs are already down for the count, the trend shows no sign of stopping. We’re only two and a half months into 2018, and the $2.9bln raised so far is on pace to eclipse the sum total of investments made in the past two years.

Amazingly, ICOs are still recording exponential investment figures despite 2017s unsavory success rates. Even with the market dragging its feet on a downtrend for most of 2018, startup investments across the board aren’t stopping to pick up any dust. In fact, as 2018’s ICO statistics betray, total cryptocurrency/blockchain-related investments look like they’ll surpass 2017’s record numbers. This includes an old player in the investing game that we might forget in lieu of the rookie ICO: venture capital.

Venture Capital: The Oldschool Alternative to the ICO

Embellished headlines and articles peppered with fascinated curiosity over ICOs would make you think that they are the preferred–if not only–investment avenue for crypto startups. But this is hardly the case.

Venture capital has had its hands in the cookie jar for as long as initial coin offerings have been around. Perhaps they receive less coverage because they’re less of a novelty, or maybe it has to do with the nature of the investment and who’s doing the investing. By their model, ICOs, like the IPOs they derived from, are open to (most) all investors, regardless of accreditation and net worth.

Venture capital investments, on the other hand, come from hedge funds, private equity firms, or persons of extreme wealth. They’re basically individuals and entities with the resources to pour millions of dollars into young and risky-yet-promising projects with the hopes of quality returns on the original investment. 

And ICOs and cryptocurrency, in general, offered more than quality returns. With the right pick, a good investment garnered Wall Street penthouse-worthy ROIs. Still, most venture capital firms have been wary to invest directly into crypto, and with good reason. If you’re playing with millions of dollars, hesitancy is wise in a market whose volatility can just as easily turn an original investment into monopoly money as it can into a digital goldmine.

Rather than a head-on approach, venture capital firms would rather come at crypto from the sides, placing their bets on services or businesses related to cryptocurrencies and blockchain. This could be anything: exchanges, wallet services, development labs, payment solutions, etc.

These are the channels that venture capital is pumping money into, and they’re the same startups that have attracted almost as much attention as ICOs.

Show Me the Money

Over the last few years, venture capital investment may not be quite on par with the multi-billion dollars invested in ICOs, but still, the sum of money flowing in is far from trivial.

According to a Crunchbase News study, roughly 1,000 VC deals have been brokered in the blockchain realm since 2012. These 1,000 have racked upwards of $2.5bln dollars in investments from 2012-2017, with about $1bln of this coming in 2017 alone. Even more impressive, it looks like 2018 could be a record-breaking year for venture capital in crypto. At the time of Crunchbase’s report, firms have already pledged $400mln in funds to a variety of projects. That’s 40% of 2017’s total investment sum in two months.

So far for this year’s tally, hardware wallet manufacturer Ledger has received the most attention from investors. The company raised $75mln from 12 investors in its Series B investing round, the largest contribution coming from the pan-European fund Draper Espirit.

In years past, other industry leaders on Ledger’s caliber have secured their own fairly large share of venture capital. 21 Inc., for example, netted a staggering $116mln in its first round of investing in 2015, the single largest VC investment made in the industry to that point. In its third investment round back in 2015, Circle Internet Financial garnered $50mln in capital, another one of the largest venture capital investments in the industry’s nascent lifetime. The next year, Blockstream and Ripple both beat this capital allocation with $55mln investments each, putting Blockstream’s total VC tally at $76mln and Ripple’s at $96mln. Circle received another round of funding in 2016, as well, with this $60mln in fresh money giving it a grand total of $136mln over the years.

Coinbase, however, takes the cake for largest single round and aggregate investment. In 2017 alone, Coinbase accrued $108mln in their Series D investing round, leaving the company’s total venture capital funding in the ballpark of $235mln. Other notable industry leaders who rode out 2017 on a wave of cash are Canaan Creative ($43.45mln) and BitGo ($42.5mln).

Who’s Coughing Up the Dough?

Crypto’s VC big players represent an eclectic group. Alongside seasoned venture capital firms and high-roller individual investors, you have legacy financial and tech corporations, financial institutions/banks, and crypto-specific capital groups.

SBI Holdings, Google, and Overstock are the most active among their corporate peers in blockchain investments, a report by CB Insights reveals. Each company sports a unique and diverse crypto portfolio, including R3, Ripple, and Kraken (SBI Holdings); Storj, Ripple, and LedgerX (Google); and Factom, Ripio, and Peernova (Overstock).

Large banks and financial institutions have, surprisingly (or unsurprisingly depending on who you’re asking), plenty of cards on the table, too. In fact, many banks began investing as early as 2015. Among these include Citi, Goldman Sachs, and JP Morgan and Chase Co., who all hold positions in R3, Axoni, and Digital Asset among others.

There are a handful of industry moving venture capital firms pouring money into crypto, but out of this mix, the highest bidders are those firms that specialize in blockchain investing. Traditional investors like Draper Associates, Andreessen Horowitz, and Union Square Capital all have skin in the game, but their portfolios are dwarfed by the likes of the Digital Currency Group. By the end of 2017, the Group boasted an investment count of 40 different companies, a number they’ve already looked to increase this year. Tied for second, Blockchain Capital and Pantera Capital both held positions in 8 different ventures by the end of 2017.

Some Takeaways

Venture Capital investment in blockchain has steadily ramped-up over the past few years, and if the beginning of 2018 is any indicator, it shows no signs of slowing down.

Unsurprisingly, the majority of these investments come from blockchain-specific groups, with big name banks and legacy tech businesses leading the way. Most of this venture capital has been raised for companies located in the United States, according to Crunchbase, with the United Kingdom coming in second and Singapore and Switzerland tied for third.

On a basic level, VC investment rounds allow startups to receive large, lump sums of capital to feed their operating budgets, cash flow that they wouldn’t have access to otherwise. Not every blockchain company launches its own coin, so some of these businesses do not have the luxury of running an ICO.

Still, ICOs have attracted more money in the past half decade than VC fundraisers, and this likely has to do with the ICO’s inclusive, low-barrier to financial entry. As the industry evolves, though, we’ll likely see more venture capital gravitate towards cryptocurrencies and blockchain companies, so we’ll see if this old dog can keep up with the budding industry’s new fundraising tricks.


This article by Colin Harper was originally published by

Bitcoin Futures Trading

The prospect of bitcoin futures trading on major financial exchanges has clearly been bullish for the price of bitcoin. The price at the beginning of this week, hovering around $15,000, is 145% higher than when CME Group announced on October 31 that it would launch bitcoin futures trading by the end of the year, and 53% higher than when news broke of the CFTC’s regulatory approval of these markets on December 1.

But how will futures trading affect bitcoin’s price once it’s launched, especially if institutional capital enters the space? To find out we’ll examine how a futures contract works, as well as the motivations and behaviors of the various players who may speculate on the price of bitcoin using futures.


The Basics of Futures Trading

First, a quick primer on futures contracts and how they trade. A futures contract is a financial derivative in which two parties agree to trade a certain good or financial instrument at a future date and at a set price.

For example, buying a 12-month oil futures contract for $60 means you (the contract holder) agree to buy oil at $60/barrel 12 months from now, regardless of what the price of oil is at that time. By agreeing to buy the oil you are “long” the contract, while the person who agrees to deliver the oil then is “short” the contract. Note that futures contracts can be sold at any time on an exchange that trades that particular contract, and the buyer of the contract would then inherit the obligation of the futures contract.

Some contracts can be settled by physically delivering the oil, some allow to settle with cash for the difference between the futures price and the spot price at that time, and some allow both options. Bitcoin futures to be traded on the CME are structured for cash settlement.

Here’s an example of how a bitcoin futures contract on the CME would trade. I buy a BTC futures 12-month contract with a $15,000 settlement price. Let’s assume that on that day 12 months from now, the actual price of BTC is $18,000.

Instead of the seller of the contract selling me a bitcoin for $15,000 and me taking it to an exchange to sell it for $18,000, the contract seller will simply give me the $3,000 difference. This is known as a cash settlement, and usually, the financial result is effectively the same as physical delivery.


The risk: could big investors short futures and tank the price of BTC?

Even if the average crypto investor understands futures trading, they won’t be entering this arena anytime soon; each contract is for 5 bitcoin, and the minimum block of contracts in a trade is 5 contracts. At a $15,000 BTC price, that means you won’t be making any trades for less than $375,000.

A key feature of a futures market is that it’s bidirectional, meaning that you can be short the market without the hassle of engaging in a traditional short position (i.e. finding someone to borrow the asset from).

Since the bitcoin futures contracts will be cash settled, betting against bitcoin is now much simpler (though there are a few existing ways to short bitcoin).

Institutional capital tends to be skeptical of bitcoin at best, judging by the statements of Jamie Dimon, Warren Buffett, or Mohamed El-Erian. This shouldn’t be surprising since in many ways digital currencies are a competitor to the long-term business plans of these bankers and investors. These people are highly incentivized for bitcoin to fall in price, or fail entirely.

Add it all up, and bitcoin bulls might start getting a little nervous. The only groups with enough cash to trade these new futures markets are institutional capital, who by and large have a very negative view of bitcoin, and they are about to start trading on the first reliable exchange that will let them short bitcoin at scale!

One could argue there is an enthusiasm gap in play here; if you are a crypto believer with capital, you already went off to start one of the dozens of crypto hedge funds in operation today. For a bitcoin skeptic, your options to express that view just expanded greatly.


Counterpoints: the bull case for bitcoin futures

So if bitcoin futures are such a threat to bitcoin, why is the price of bitcoin still rising so fast? Let’s look at some counterpoints to the bearish thesis to bitcoin futures.

First, institutional capital can think bitcoin is the biggest scam since the Dot Com Bubble, but much of it can’t touch these markets to begin with. The Volcker Rule of the Dodd-Frank Act prohibits banks like Jamie Dimon’s JP Morgan from engaging in speculative trading of almost every kind, of which the shorting of digital currencies definitely counts! The move for these bitcoin bears isn’t to short bitcoin, driving the price down, but merely steer clear of it and other digital currencies altogether.

Second, for every traditional hedge fund that can’t wait to short bitcoin, there are others who would love an opportunity to gain long bitcoin exposure but simply doesn’t trust the custody of crypto exchanges, or can’t handle the lack of technical support or constant downtime. (If you’ve ever tried to use a crypto exchange during a hard fork or major crypto news event, it’s hard to blame them).

Up until now, their options were limited to the Grayscale Bitcoin Investment Trust (GBTC) which frequently trades at a 30% to 80% premium to actual bitcoin, showing there is significant demand from investors who, for whatever reason, are restricted from purchasing the actual bitcoins themselves.

Lastly, few investors will look at bitcoin’s rise in price in the last year and have no fear of shorting the asset. When an asset can double in a week, your risk exposure with a short position is enormous – theoretically unlimited.

Perhaps you might believe that bitcoin is in a bubble because it can’t be valued using fundamental analysis, but that was true a year ago as well, and if you put on a short bitcoin position in December 2016 you would have lost about 17 times your initial investment (or in terms of futures trading, you would have been margin called and/or had your position forcibly closed long ago by your exchange).

With a minimum trade exposure of $375,000, those losses will add up pretty quickly.


Conclusion: Volatility ahead, but ultimately good for BTC

That doesn’t leave you with a clear decision on whether to go long or short bitcoin in anticipation of futures trading. CME Group’s will launch their bitcoin futures product on December 18, but their smaller rival CBOE recently announced they will beat CME to the punch and begin bitcoin futures trading on December 10th, this coming Sunday afternoon. Various factors could cause the influx of capital to take either long or short position, but either way, it will likely mean significant price swings in the short term.

However, in the long term, this is a significant step toward legitimizing bitcoin and other cryptocurrencies, and should eventually lower the daily volatility of bitcoin as it trades alongside more traditional asset classes.

This article by Wes Levitt was originally published at

Enforcement Plan Labour Relation

Since its introduction, the Deregulations Labour Relations Assessment Law (Wet Deregulering Beoordeling Arbeidsrelaties or DBA law) has caused nothing but trouble. The Dutch Tax Authorities recently publicised a plan of approach for the enforcement of the law. The Enforcement Plan Labour Relations (Toezichtsplan Arbeidsrelaties), as it is called, was presented to show how the Tax Authorities will approach the enforcement of the DBA law. It states that around 100 assignment providers will be visited for an audit, covered as a friendly conversation with a business relationship while just drinking some coffee. The assignment provider will then probably be interviewed about labour relations and the way things work out on a daily basis.



The approach of the Tax Authorities seems to have two major aims. The first one is to get more insight on the practical experiences, which can be used to improve the legislation in this area. Second, they aim to monitor the assignment providers and possibly enforce the DBA law by use of the criterion that an assignment provider maliciously violated the law. This may have some serious repercussions because the Tax Authorities can impose a fine and also start a criminal prosecution.


Enforcement Requirements

If facts and circumstances lead to the presumption that there is a (fictional) employment and malice, the Tax Authorities will further investigate, which may lead to enforcement. According to the Enforcement Plan the tax inspector will enforce the law if the following requirements are met:

 (1) There is a (fictional) employment;

(2) There is obvious false self-employment;

(3) The false self-employment is maliciously existing.


(Fictional) Employment

In order to assess whether there is a (fictional) employment, two key elements will be investigated. The first one is the agreement between the assignment provider and the contractor. The second one is the way the agreement has been shaped into the actual working activities. A good example of the difficulty to determine the existence of an authority ratio is the Amsterdam Court’s judgement. Based on the text of the agreement and the actual working activities[1], the judge concluded that a deliverer from the food delivery company Deliveroo did not have a labour agreement and that there was no authority ratio.



Furthermore, the tax inspector must prove that there is obvious false self-employment. Up until now, there has not been an explanation of this formula. Hence, it has to be determined by the grammatical meaning. Since “obvious” entails that something is very clear, it should thus be really clear that the self-employment is not what it is made out to be.


Malicious Act

Last but not least, the tax inspector must prove that the false practice was a malicious act by the assignment provider to benefit from lower tax and insurance costs. The Dutch Minister of Social Affairs and Employment Opportunities has given a definition of the word malicious in this context. “Malicious is the assignment provider or contractor who deliberately creates or lets continue a situation of obvious false self-employment, because he knows – or should have known – that there is actually a factual situation of employment (and with that improperly benefits financially and/or unfairly affects the playing field).”[2]

The definition does create some uncertainties, because the word “intentionally” is used in the Enforcement Plan, while “should have known”  serves as a sufficient condition for prosecution according to the Minister. “Intention” does, however, require that someone actually knew about it. Therefore, it is difficult to know whether “should have known” is indeed sufficient to assume that something was intentional. The most logical explanation would be that the standard requirements for the term “intention” apply in such situations. Analogically seen, “intention” thus requires one of the party’s to have known about the illegality of the situation, but decided not to take action.

The reasons for the government to interfere in these labour relations between assignment providers and contractors is simple, as such assigments generate less revenue from tax income and the contractors are not insured to the same standards. In my opinion, the second reason should be the government’s main focus, because it is of more importance than the amount of money that our governments receives by taxation.

The same matter applies for all the requirements for enforcing the DBA law. They all depend on the factual situation at that moment and time. With the new approach of the Tax Authorities, the government hopes to easily collect evidence to build a stronger case for imposing a fine or starting a criminal prosecution. They try to get the facts handed to them in a seemingly innocent manner, by visiting you for a simple conversation. When you find yourself in such a situation, it is thus of the upmost importance that  you choose your answers wisely and do not speak impulsively. This is not only to your benefit in order to avoid  involuntary cooperating with your own conviction. You might as well give information to the Tax Authorities that is incorrect which might increase the chance of being falsely convicted. The Tax Authorities and the tax inspector might not tell you, but rest ussared everything you say can and will be used against you.

Yet, there is a glimmer of hope. According to the Dutch Supreme Court, evidence that depends on the will of a natural person and was acquired against the will of a suspect, may only be used by the Tax Authorities in order to impose taxes.[3] Analogically, this evidence depending on the will of a natural person cannot be used to support the imposition of a fine or to support a criminal prosecution charge. In short: words can not hurt you, since theydo not lead to a fine or criminal prosecution if there is no other evidence.

[1] Rb. Amsterdam 23 juli 2018, ECLI:NL:RBAMS:2018:5183,JAR 2018/189, m.nt. Wiewel & van Slooten.

[2]Kamerstukken II 2016/17, 34 036, nr. 44.

[3] HR 12 juli 2013, ECLI:NL:HR:2013:BZ3640,NJ 2014/35, r.o. 3.8.

Caution: Obligation to declare benchmark reports

The Dutch External Financial Relations Act of March 1994 imposes an annual obligation to declare on Special Financial Institutions or SFIs (BFIs in Dutch). These must submit their benchmark report to the DNB Bank (De Nederlandsche Bank) every year for the DNB to investigate the legitimacy of their balances and transactions. Sometimes this is forgotten. Therefore, action needs to be taken.

SFI: Special Financial Institution

All resident enterprises and institution qualify as an SFI, irrespective of their legal form, if:
– non-residents hold a direct or indirect interest – whether or not through shareholding – in the enterprise or institution or otherwise exert influence; and
– these non-residents’ objective it is, or whose activities consist to a significant extent, whether or not these activities are performed in combination with other domestic group companies:

1. to mainly hold assets and liabilities abroad; and/or
2. to channel revenues consisting of royalty and licensing proceeds received abroad to foreign group companies; and/or
3. to generate revenues and expenses that mainly originate from re-invoicing from and to foreign group companies.

Obligation to declare a benchmark report

Hence, if you run a resident enterprise or institution that meets this definition, it is considered an SFI. You are thus obligated to file a benchmark report with the DNB. This also entails that you are legally obliged to register the SFI registered accordingly with the DNB. Based on the benchmark report, which accounts for a company’s balance of payments and international investment position, the DNB can assess your company’s position in the international market and the legitimacy of the transactions. 
Moreover, a composing an annual benchmark report might be to your benefit too, as the report charts the annual growth and economic sustainability of your enterprise or institution. 

Please do not hesitate to contact us for more information on benchmark reports or submitting these to the DNB. 

Breaking news: 30% ruling

On Prinsjesdag, September 18th,  2018, the Dutch government pronounced to shorten the duration period of the 30% ruling to 5 years instead of the former 8 years. 

Nearly a month later, on October 14th, 2018, the word got out that this reduction of the 30% ruling duration period from 8 to 5 years is off the table. 

Background October 14th 
On October 9th,  an extra-ministerial committee meeting was held in view of the dividend tax withholding proposal as part of the 2019 Budget Plan. Following the political commotion on this topic from the start and especially after Unilever’s announcement not to move the UK office to the Netherlands, the parliamentary proceeding of the related source taxation measures have been postponed. It was also decided to withdraw the proposal to reduce the 30% ruling duration to 5 years. 

TTT’s comments
When Mark Rutte responded to Unilever’s announcement that they may reconsider the dividend tax withholding proposal whilst putting the extra budget into the Dutch economic climate again, we viewed this as a perfect momentum to reconsider the 30% ruling measure, especially for those employees who would lose the 30% ruling prematurely. 

As we expected that case law would not have resulted in a positive outcome to those who wanted to fight the premature loss of their ruling, we only hoped that the measure somehow would not make it to the finish line. Based on our current understanding the whole proposal is now off the table and not only the most criticized measure that the current 30% ruling holders would lose the ruling prematurely. This surprises us a bit since the general public perception was that a reduction of the duration period to 5 years was quite understandable since 80% of the beneficiaries already left and a 5 year period was more in line with the duration period of expat regimes internationally. The concerning issue was really with imposing new rules to existing cases.

Obviously, the reputation of the Netherlands has been impacted already negatively due to the decision to reduce the 30% ruling duration period in the first place, mostly where this would also affect existing cases. The Dutch government should simply stick to their promise and the Dutch legislative framework should be stable, meaning predictable and foreseeable. 

Nonetheless, many current 30% ruling holders and their employers would be extremely pleased by this recent development and any tax planning or compensation measures that may have already been considered may, after all, not be necessary anymore. Let us all hope that is now also remains off the table. It is our hope and expectation that at least current 30% ruling holders are safe from retroactive measures on the duration period for next year and potentially next years.

In any event, 30% ruling holders and their employers would be advised to be prepared for measures on the 30% ruling in the future. It has been shown in the past years that the 30% ruling has become a high volatile topic in politics.

Correction October 15th 
When the aforementioned news of October 14th went public, it created quite the fallout. Hence, on October 15th, the Dutch government officially announced to reduce the 30% ruling duration period from 8 to 5 years as of 2019 after all. For the current 30% ruling holders, though, a transitional arrangement will apply for the years 2019 and 2020. As a consequence, there is no premature loss for (i) those employees who would have lost it immediately per January 1st, 2019, or (ii) whose 8 or 10 year duration period would lapse before 2021. 

However, for employees whose duration period on January 1st, 2021,  surpasses 5 years will lose it prematurely. It is therefore still not satisfying that no generic non-time restricted transitional rule applies to all current 30% ruling holders although we appreciate the extra time given.

Obviously, we still have to be aware that in politics nothing is ever really final, but we would be very surprised if any changes to the current status as explained above (with transitional rules being applicable in 2019 and 2020) will occur. We expect, therefore, that the Senate will also approve this new amended proposal. 

We advise employers to inform their employees, who currently have or will get the 30% ruling, about the latest developments and make them aware that the Dutch tax rules will always be subject to potential changes that may not always be foreseeable or predictable, and also inform them clearly on the company position how to deal with employees suffering any potential disadvantages. 

Based on the article by DBi-partners Kas van der Meulen and Dennis Reins of the TTT-Group

Tax Plan 2019

On Tuesday, September 18, 2018, better known as Prinsjesdag, Minister of Finance Hoekstra presented the Tax Plan for 2019. The Ministry for Finance has based these fiscal plans on 5 concrete goals: reducing the burden on workers, creating an attractive climate for setting up business, making the Netherlands greener, implementing satisfactory enforceability and the tackling of tax avoidance or evasion. You can read all about what these proposed changes could mean for you and/or your company here.


Income tax
Payroll tax
Corporate tax
Dividend tax
Sales tax
Inheritance tax
Environmental tax


Income tax

Double-bracket system box 1

The current Dutch income tax system in box 1 is based around 3 brackets. The cabinet wants to simplify this by making the transition to a double-bracket system, with a lower rate of 36.95 per cent and a higher rate of 49.5 per cent. However, the Dutch Tax Authorities are retaining the previous triple-bracket system for those entitled to the basic state AOW pension.

This transition will be made on a step-by-step basis and will be accompanied by a gradual change in tax rates. Specifically, the lower rate will increase from 36.65 per cent in 2019 to 37.05 in 2020. The higher rate, on the contrary, set at 38.10 per cent in 2019, will subsequently drop to 37.8 per cent in 2020 and to 37.05 per cent in 2021. The threshold will stay at € 20,384 throughout this period. This means that you will pay tax at the lower rate on income up to and including this amount. If your income exceeds this threshold, you will be taxed at the higher rate on the remainder of your income. This higher rate applies to income up to and including € 68,507. For taxable income over this threshold, a combined rate of 51.75 per cent will apply in 2019.

Rate increase box 2

As of 2020, the tax rate in box 2 will gradually increase. In 2019, as in 2018, the Tax Authorities intend to levy 25 per cent tax on profits from shares. That rate will see subsequent increases of 26.25 per cent in 2020 and 26.9 per cent in 2021. In order to lessen the pain, the government is planning less tax on profits for entrepreneurs who own more than 5 per cent of the shares in a company.

Economizing on loss carry forward box 2

In addition, the 2019 Tax Plan contains the proposal to shorten the loss carry forward period in box 2 from 9 to 6 years.

General tax credits

The cabinet is also proposing an increase in general tax credits. Consequently, in 2019, the maximum amount of tax credits available to those on incomes up to € 50,000 per year will go up by € 140. In 2020, this will rise by a further € 103. Yet another increase, in 2021, will see the total increase come to € 350. The cabinet is hoping that this will improve buying power.

A measure on rates pertaining to tax base-reducing items

Furthermore, Minister Hoekstra has also made it known that the cabinet wants to phase-out a number of tax base-reducing items. This is not a new proposal, but it is now being speeded up. As a result, as per January 1, 2020, there will be a lower maximum rate for deductible costs related to personal residences, and entrepreneur’s and personalised deductions. As for profit exemption for SME’s, the measure will, however, only apply when the total amount of joint profit, less the entrepreneur’s deduction, is positive. This is also the case for the Posting exemption when the combined result from activities is positive. By 2023, the lower rate for these items will drop to 36.95 per cent.

Decrease in notional ownership value

For private residences valued between € 75,000 and € 1,060,000, the notional ownership value percentage will decrease by .15 of a per cent between now and 2023. Similarly, the notional ownership value percentage for private residences with a value under € 75,000 will decrease on a step-by-step basis, albeit at a lower percentage. Finally, there is a decrease of .24 per cent for residences that come under the deployment scheme and that have a value up to € 1,060,000.

Adjustment to interest tax

In the 2019 Tax Plan, the cabinet is proposing no tax on interest for tax returns filed on time.


Payroll tax

Transitional measure 30 per cent ruling

As previously reported, the duration of the 30 per cent ruling will henceforth reduce from 8 to 5 years. This change is not accompanied by a transitional measure. This five year period is thus not just applicable to new appointments from 2019, but also to existing transitional 30 per cent ruling.

Increase in volunteers’ scheme

When organisations wish to appoint volunteers, they do not have to deduct any tax or premiums on indemnification for that voluntary work. That is, nonetheless, only so if this indemnification remains under the set threshold. From 2019 on, this threshold will be increased to € 170 per month and € 1,700 per calendar year.

Increase in labour deduction

From 2019, Dutch tax payers with a yearly income between € 20,000 and € 60,000 will be entitled to an increase in the labour deduction.

Tax credits for foreign tax payers

The government views the inhabitants of the European Union, European Economic Area, BES islands and Switzerland as non-qualifying foreign tax payers. By EU law, these are entitled to a tax share of the labour and income-dependant combination deductions. This also applies to those foreign tax payers who run a company permanently established in the Netherlands. Although the Dutch Tax Authorities has already applied this entitlement, it will officially become law on January 1, 2019.


Corporate income tax

The rate for the first corporate income tax bracket applies to profits up to and including € 20,000. That rate will be 20 per cent in 2019 and decrease to 16 per cent by 2021. Profits in the second bracket will be gradually taxed less as well. By 2021, the corporate income tax rate for the second tax bracket will drop to 22.5 per cent. That is 1.25 per cent more than the cabinet stated last year.


Dividend tax

Abolition of Dividend tax

It is no secret that the Rutte cabinet wants to abolish dividend withholding tax. Whether it happens or not has always been the question. Minister Hoekstra finally had his say on Prinsjesdag 2018: dividend withholding tax is indeed being abolished, but not before 2020. In this way, the Netherlands hopes to remain/become an attractive location for international companies to set up.

Introduction of withholding tax

The abolition of dividend withholding tax will go hand in hand with the introduction of specific withholding taxes. By levying withholding tax on dividends going to jurisdictions with low taxation rates, the governments wants to stop cash flows to tax havens. Additionally, withholding tax will also apply to constructions set up with tax avoidance in mind.


Sales tax 

The Dutch VAT system, which contains 3 separate rates, will, from now on, have its lowest rate at 9 per cent instead of 6 per cent. This lower rate is applicable to shopping, as well as to certain services. Besides a small increase at the checkout, this will mainly have administrative consequences for entrepreneurs.

Extension of Dutch VAT-sports exemption
The VAT-sports exemption that the Netherlands has applied up to now will also be granted in the future to non-profit sports associations holding sports-related events for non-members.


Inheritance tax

The cabinet is also proposing to revise interest tax on inheritance tax interest. Interest tax would thus not be applicable to (current) inheritance tax assessments. That will, however, only be the case when the request to make a provisional and/or actual return is filed on time.


Environmental tax

The Dutch government wants to take a more severe approach to environmental pollution by, amongst other things, levying a heavier tax on natural gas. More ecologically-aware tax payers, in contrast, will be rewarded. The cabinet is planning to impose less tax on electricity. Furthermore, landlords who renovate a residence for rental with a view to energy-saving will also benefit from a reduction in tax. Additionally, those going to work by bicycle benefit in the 2019 Tax Plan. The government has simplified the fiscal scheme through which it will be possible in the future to make use of company bicycles.

Do you still have questions about the 2018 Tax Plan or taxation in general? Then do not hesitate tocontact us.

Will a foundation have to file its annual accounts in the future?

On September 11, only a week before this year’s Prinsjesdag, the Dutch Lower House adopted two parliamentary motions. Along with consenting to an investigation into trust sector domiciliation, the Lower House has also agreed to examine if foundations will have to file annual accounts from now on.


For legal and fiscal purposes, a foundation is considered to be a legal form which is not intended to make a profit, but to pursue other goals instead. If a foundation does make a profit, this must merely be as a result of the pursuit of the goals of the foundation, and not purposely benefitting the governors or founders of the foundation financially. Moreover, this motion only concerns foundations, not associations which, unlike foundations, have members.

Annual accounts of a foundation

Up to now, a foundation was not usually compelled to draw up annual accounts. The reason for this was simple: profit and loss accounts or balance sheets appeared insignificant for a non-profit organization. The book-keeping of a foundation generally does not focus on sales figures, purchase or sale invoices, or indeed tax submissions. Instead of this, the book-keeping primarily exists to account for monies received or spent in order to realize the goals of the foundation.

Obligation to file a foundation’s annual accounts

By compelling a legal form to file annual accounts, the Dutch Tax Authorities can check to what extent this legal form makes a profit or loss. Annual accounts are thus also interesting with regards to a foundation. When the foundation is pursuing a profit, or makes one in the course of trade, it is running a company after all. Consequently, the foundation is obliged to declare corporate tax. Additionally, a foundation that realizes a turnover on a regular basis meets the requirements of the legal form enterprise. Hence, the foundation is obliged to pay VAT.

Examination of the annual accounts will confirm if this is the case. Failing to file annual accounts can, therefore, be seen by the Lower House as a tax avoidance construction.

This is why the Lower House has approved the motion to research –within the next 8 months- the revision of the obligation on foundation to file annual accounts (Kamerstukken II, 34 566, nr.10). Along with this, the Lower House will have to submit a threshold to determine whether a foundation makes turnover instead of the allowed profit.
At the moment, various foundations and associations are already obliged to file annual accounts. This obligation to file applies when they are engaged in an enterprise which, in two successive financial years, makes a turnover of at least 6 million EUR per financial year (ANBI’s are only obliged to publish their annual accounts, not to file them). Similarly, organizations in certain sectors, such as pension funds, broadcasters, and housing cooperatives must file annual accounts.


If you wish to get more information on foundations, or the taxes that are connected to them, do not hesitate toget in touch with us.

Which City will be the Capital of Blockchain Technology

Leaving Silicon Valley

Silicon Valley has long been the de facto location for budding startups to set their roots and grow into multimillion-dollar businesses, but it may not be the capital of blockchain technology. As of July 2017, 62 out of the 105 total U.S. companies, valued at over $1biljion, are located in California. To put that into perspective, New York has the second highest amount with only 15 businesses.

However, with the power of decentralization, blockchain-based startups are proving that you can find success outside of the Silicon Valley bubble. Cities around the world, whether it be through looser regulations, strong financial ties, or some unknown factors, have started vying for the title of “capital of blockchain” and are emerging as meccas for young cryptocurrency companies. Although a forerunner hasn’t emerged yet, there are a few regions beginning to develop as hot spots for this new innovation.

Chicago, USA

Flying under the radar, Chicago is quickly building itself to be a world leader in cryptocurrency. The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) were two of the first U.S. financial exchanges to support Bitcoin futures trading.

Lesser known, the Illinois government was one of the first to embrace blockchain technology by forming the Illinois Blockchain Initiative (IBI). The IBI is a dedicated approach to:

  • Create non-onerous legislation surrounding the technology,
  • Perform blockchain pilot programs within government organizations, and
  • Develop the blockchain ecosystem in Chicago.

The Chicago Blockchain Center (CBC) is spearheading objective number three. The CBC hosts developer workshops and meetups as well as supports local startups through incubation. All of this combined has led to the growth of a large blockchain community in the Windy City.

In fact, Chicago is a leader in venture-backed blockchain startups. Chicago companies have raised over $69 million to date – more than three times the amount of Austin, Denver, and Seattle combined.

 Notable Companies/Projects: Bloq, CFX Markets


Austin, USA

Fielding refugees from San Francisco’s inflated housing market, Austin is carving a niche for itself with blockchain startups. Having no income tax and a natural Libertarian attitude, the state capital is primed for crypto-minded entrepreneurs.

The city has hosted the Texas Bitcoin Conference since 2014 but more famously brings in hundreds of thousands of attendees for South by Southwest (SXSW) each spring. Although not focused on cryptocurrency, SXSW this year included several speakers and panels focused on blockchain and its impact on other industries.

As one of the fastest-growing cities in the U.S., it wouldn’t be surprising to see Austin solidify itself as the place to settle down a cryptocurrency headquarters.

Notable Companies/Projects: Factom, Wanchain

New York City, USA

Although many have fled due to the implementation of its BitLicense, New York is still a hotbed for blockchain innovation. With deep roots in financial markets, it’s only natural that the Big Apple is home to some of the most well-known crypto companies and exchanges.

Beyond New York’s sheer population dominance over other cities, it also hosts one of the largest blockchain conferences in the world – Consensus. This year, the conference has even expanded to an entire “Blockchain Week”. CoinDesk and the New York City Economic Development Corporation have partnered to organize the week’s events with the goal of making NYC a global blockchain capital.

With massive amounts of investment capital and the Winklevoss twins leading the charge for self-regulation, New York City could easily become the new capital of blockchain.

Notable Companies/Projects: Gemini, Blockstack, Consensys



A country rather than a city, Singapore is a strong magnet for companies looking to ICO. The Monetary Authority of Singapore (MAS), has stated time and again that they have no plans to regulate the industry and instead provide ample support.

They’ve embraced the new tech in an experimental project, Ubin. The project is in partnership with R3, and the goal is to “explore the use of Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities.” Although not directly affecting regulation, Ubin helps members of the MAS further understand blockchain and the value it can bring.

The MAS has even gone further by allocating $150 million towards FinTech projects in the country.

Singapore also is home to FinTech Festival – the largest FinTech conference in the world. Over 30 thousand people from around the globe participate in the festival, bringing loads of talent to the small nation.

Notable Companies/Projects: Digix, TenX, Zilliqa

Zug, Switzerland

Already commonly called ‘Crypto Valley’, Zug is the current leader for the capital of blockchain title, and it’s clear why. Switzerland has historically been fairly lenient when it comes to banking and financial regulations.

On top of that, Zug has some of the lowest taxes in the nation and has taken a business-friendly approach to cryptocurrency. The government supports citizens paying in Bitcoin for some services and also uses Ethereum in a digital ID system.

Bitcoin Suisse, the financial service provider behind numerous high profile ICOs (Status, OmiseGo, SingularityNET) also calls Zug home.

Entrepreneurs in the area have formed the Crypto Valley Association to help foster growth of the ecosystem. This association collaborates with partners around the world and works with the local government to create fair blockchain regulations. Even so, the canton is far from having all the answers on how to regulate this new asset class. It’s a good sign, though, that government officials are openly working with the people that it affects most.

Notable Companies/Projects: Bitcoin Suisse, Xapo, ShapeShift, Monetas, Tezos

Decentralizing the Capital of Blockchain

These are just a few of the regions making a name for themselves in the blockchain space. With the decentralized nature of the industry, it’s entirely possible that one single “capital of blockchain” never surfaces. And, that’s a good thing.

In the end, we’re all on the same team. Projects should continue to collaborate across borders to ensure the success of the entire industry. Because when blockchain wins, we all win.


For further information about blockchains and the public policy regarding cryptocurrencies, please contact us via

This article by Steven Buchko was originally published at

Brexit Impact Scan

March 29th, 2019, the United Kingdom will no longer be part of the European Union. The Brexit has an undeniable impact on the economic market of England, Scotland, Wales and Northern Ireland. Yet, many entrepreneurs running their (international) business in the remaining EU members, tend to underestimate the impact the Brexit might have on their own business ventures. 

Therefore, the Dutch Tax Authorities designed a tool to assess the Brexit’s impact on companies located in the Netherlands. Based on a questionnaire about your company’s import, suppliers, transport, export, use of digital services and transport, the tool scans for the impact the Brexit entails for your Dutch-based company. In addition, you will also be advised on how to lower or avoid potential liabilities, based on the ongoing negotiations between the United Kingdom and Europe. 

 For more information about doing business in the Netherlands (or abroad), you can contact us

The Benelux Office for the Intellectual Property (BOIP) has reached new important milestones.


The Benelux Office for the Intellectual Property (BOIP) has reached new important milestones in view of harmonization of European Trademark Law: the introduction of administrative cancellation and invalidation procedures. It herewith follows the procedural system of the EU IPO as already in force for many years.

For Trademark owners, these administrative proceedings entail the benefit it will no longer be required to initiate judicial proceedings, which are often more expensive and hence presented a higher threshold for taking contentious action.

These procedures will enter into force on 1 June 2018, together with the new competences of the Benelux Court of Justice, which is henceforth the new and sole appeal body for BOIP. Under the old regime, appeals against the decisions of the BOIP had to be filed with the Courts of Appeal of Brussels, The Hague or Luxemburg, which had led to some discrepancy in case law.

Until June 1, 2018 cancellation requests were settled before the national Courts. It was not possible to request cancellation or nullity of a Benelux Trademark registration (or International registration with protection in the Benelux) in administrative proceedings.

From now on the BOIP is competent to analyze and decide on requests for cancellation of a Trademark registration, on the same grounds as cancellation procedures before national courts.

Although it is still possible to bring such requests directly before any of the national courts, it is expected that the administrative procedure will be simpler, faster and cheaper compared to regular court proceedings.

Invalidation requests are applicable on either absolute (e.g. Devoid of distinctive character) or relative grounds (e.g. in conflict with earlier mark). Revocation of a Trademark right can be requested on the basis of non-use, or in case of a sign that has become generic or customary or misleading by use.

These cancellation grounds, which will be implemented in two steps, overlap with the grounds that can be invoked under the EU legal framework with the notable omission of ‘another sign used in the course of trade of more than mere local significance’ as laid down in Art.8 (4) of the EUTM Regulation.

The administrative cancellation procedure is a further step in European harmonization. It is a considerable improvement as cancellation procedures are now more accessible.

That being said Trademark owners should be (more) cautious in properly using their Trademark and should collect evidence of use in order to defend their rights against a potential claim on the basis of non-use. Like the EU, the Benelux has the particular aspect of having multiple countries involved which is most likely to cause issues to grapple with in future decisions.


Other Changes in the Benelux

New opposition ground

In addition to opposition on the basis of an earlier right, a new ground can be relied on. Owner of Trademarks with a reputation in the Benelux territory may oppose to similar Trademarks, where use of the sign without due cause would take unfair advantage of or be detrimental to the distinctive character or to the repute of the earlier Trademark.

Just as for cancellation proceedings, opposition proceedings do not offer the ground of ‘another sign used in the course of trade of more than mere local significance’.

Appeal in opposition proceedings

Lastly, a change will be achieved in divergent case law. Until last month appeal proceedings were decided by the national courts in the Netherlands, Belgium and Luxemburg. From now on they will be decided by the new second chamber of the Benelux Court of Justice in Luxembourg by means of an administrative procedure. This change is expected to contribute to more harmonized case law within the Benelux.