Taxes and whisky investments

The tax considerations for a whisky investment 

Investing in whisky has become increasingly popular in recent years. Not only whisky enthusiasts, but also investors see the potential of rare bottles and whisky casks as a lucrative investment. However, as with other types of investments, there are tax considerations to keep in mind. In this blog, we will discuss the most important tax aspects that come into play when investing in whisky.  

Taxable Gain on Whisky Investment 

One of the first tax considerations when investing in whisky is whether or not the profit you make when selling whisky is taxable. In the Netherlands, the situation is quite favourable for private investors in this respect. For example, if you buy a bottle of whisky and sell it for a profit over time, then in most cases this profit is considered to be a result of other activities. This means that in principle you do not have to pay income tax on this profit, as long as the investment does not become regular or you are professionally involved in it.  

Does the Tax and Customs Administration rule that your investments in whisky are seen as a form of entrepreneurship, for example because you regularly trade in whisky and make a structural profit from it? Then the profit can become taxable. In that case, depending on the situation, the profit may be considered profit from business. You will then have to pay income tax on this. 

Wealth tax 

In addition, it is also important to look at the wealth tax. In the Netherlands, whisky normally falls under your assets in box 3 of income tax. This implies that the value of your whisky investments is included in determining your taxable assets. For the tax authorities, it does not matter whether you invest in shares, real estate or whisky: everything is seen as capital. Every year, you must declare the value of your whisky investment as part of your assets. The Tax and Customs Administration uses a fictitious return for this, on which you then pay tax. It is important to assess the value of your collection and to report it on your tax return.  

Import duties and VAT 

If you buy whisky from abroad, you may have to deal with duties and taxes. When you import whisky from outside the European Union, you will have to pay VAT and possibly excise duties on the value of the whisky in the Netherlands. The amount of excise duty depends on the alcohol percentage and the quantity purchased. When importing large quantities or valuable bottles, this can be a considerable expense, which can affect the profit on your investment. 

In any case, it is important to know the import rules and tax rates of the country of origin before purchasing. In some cases, it may be more beneficial to import the whisky through a licensed trading platform, given that this platform is familiar with all customs regulations and can handle all the required formalities for you.  

Inheritance tax  

If you have built up a whisky collection, it is also good to think about the tax considerations involved in transfer or inheritance. Whisky can represent significant value in your legacy. In the Netherlands, inheritance tax is due on the value of the estate, which also includes the whisky collection. The amount of inheritance tax depends on the value of the inheritance and the relationship between the deceased and the heir. It is wise to clearly state in your will how you want your whisky collection to be divided and also to include any tax consequences for the heirs in your considerations.  

Questions? Contact a specialist! 

So, you need to take into account a number of important considerations that come with your whisky investment. A platform that knows everything about taxes and the like surrounding your whisky investment is Scotch Whisky Investments. Moreover, you can easily start investing in whisky here and you can count on the best help from A to Z. We offer a guided, managed investing approach for investors who want to be unburdened during their investment. Curious about the Options and Possibilities? Or do you want to get in touch? Do not hesitate to send your questions to the specialists of Scotch Whisky Investments!