Crypto tax report or source-of-funds report: which one do you need ?

The tax report is there to prepare your tax return: it reconstructs your transactions and works out their results. The source-of-funds report is there to answer a bank: it explains where the money came from and the route it took. Both start from the same transaction records, but each answers a different question for a different reader.

The tax report: reconstruct and calculate

The report is for you, your accountant or your adviser when preparing your return. It brings together every transaction over the period concerned, exchange by exchange, wallet by wallet, and puts them in a consistent chronological order.

It usually contains:

• the inventory of the accounts and wallets taken into account, with the periods covered;

• the list of transactions: purchases, sales, crypto-to-crypto exchanges, transfers, fees;

• the results calculated transaction by transaction and by period, using a stated method;

• the areas of uncertainty: unidentified transactions, missing histories, values still to be confirmed.

It does not determine how you should report your transactions. In Belgium, the tax treatment depends on your situation and on the nature of your transactions; the report supplies the figures and the explanations, and the classification is settled with your adviser. For what to prepare before that work starts, read our guide on crypto and your tax return in Belgium.

The source-of-funds report: explain the flow of funds

Its reader is the compliance department of a bank, in Belgium or abroad, which has to understand where an amount came from before accepting it. Your gains are not its first concern: it wants to connect the money you originally invested, the transactions you carried out and the transfer now arriving.

It usually contains:

• the origin of the money you started with, and the documents that show it;

• the route the funds took between your bank accounts, the exchanges and your wallets, with dates and references;

• a readable timeline that separates the documented facts from what remains uncertain;

• an index of the supporting documents attached.

The report does not guarantee acceptance. The bank alone decides whether to accept the funds and may ask for other documents. Our guides cover the documents to prepare and what to do when a transfer is on hold.

What the two reports have in common

The same sources: transaction exports, exchange statements, wallet addresses and transaction identifiers, bank records of the transfers. A file prepared once serves both. Our guide on preparing your crypto transaction history explains how to gather them.

Both reports must be based on documented facts. A transaction reconstructed "from memory" to fill a gap weakens a tax return as much as a bank file. Better to flag the gap and explain how it was handled.

Which one to prepare, and in what order

• Your bank has written to you, or a transfer is being held: the source-of-funds report comes first, with the bank's reply deadline as the priority.

• You have to declare the year's transactions: the tax report, started as soon as your histories are together, without waiting for the filing period.

• You are selling or transferring a large amount and you know you will have to declare it: both, prepared together from the same file. The tax report's calculations feed the bank report's timeline, and the other way round.

If you are unsure, the first conversation helps establish what you need, which records are available and where to start.

What Coinpliance prepares

Coinpliance offers crypto tax support for private individuals in Belgium and crypto-to-bank support for your dealings with a bank, in Belgium and internationally. The scope of each report depends on the documents available and on what you have asked for; no report replaces a decision by a bank or by the tax authorities.

To take stock, book a complimentary 30-minute video call, with no obligation.