Crypto Borrowing and Lending: Tax in Belgium (2026 Guide)

Crypto borrowing and lending is, after staking and swapping, one of the most frequently asked DeFi questions put to the Belgian tax authority. How is the interest taxed that you earn on Aave, Compound or Morpho? Is a loan itself taxable? And what happens in the event of a liquidation? Since the capital gains tax was approved by the Chamber of Representatives on 3 April 2026 (retroactively from 1 January 2026), you are in most cases dealing with two tax layers: the interest income and the capital gain on the underlying tokens.

In this guide we explain how Cryptotax treats lending and borrowing activity on DeFi protocols, why a loan itself is not taxable income, and how you correctly report liquidations, governance tokens and exotic forms of interest.

🔍 Borrowing versus lending in DeFi

In DeFi jargon you can fulfil three roles on a lending protocol such as Aave, Compound, Morpho or MakerDAO:

• Lending (lend / supply): you deposit crypto or stablecoins into a lending pool and receive interest. In return you typically receive a receipt token such as aUSDC (Aave) or cDAI (Compound) that represents your share in the pool and automatically increases in value as interest accrues.
• Borrowing (borrow): you deposit crypto as collateral and then borrow other tokens - typically stablecoins. The borrowed tokens must be repaid, plus interest.
• Rewards: some protocols award additional governance tokens or incentive tokens (e.g. COMP, MORPHO) on top of the regular interest.

It is important to keep these roles clearly separate, as each is treated differently for tax purposes. Below we walk through them one by one, with the rates that apply in Belgium in 2026.

📊 Tax treatment in Belgium

The Belgian tax authority (FOD Financiën) looks at each phase separately - not at your lending position as a whole. This is how Cryptotax classifies the events:

Important: there is in Belgium no automatic withholding at source on DeFi interest. Even though aUSDC or cDAI interest feels passive, you must actively declare it in Box VII of Tax-on-Web (see how to declare crypto via Tax-on-Web).

💰 Interest from lending: movable income at 30%

When you deposit crypto on a lending protocol, you temporarily transfer control of it to a smart contract that lends it out to other users. The interest you receive - expressed in the deposited token or in a receipt token such as aUSDC - qualifies in Cryptotax's interpretation as income from movable assets under Article 17 of the Income Tax Code (WIB 92).

In practice this means: 30% withholding tax on the market value of the interest at the moment you receive it or it "rebases" to your wallet. Some protocols use rebasing tokens (Aave aTokens continuously increase in balance), others use non-rebasing exchange-rate tokens (Compound cTokens keep the same quantity but each cToken becomes worth more). Cryptotax detects both mechanisms automatically and schedules interest events at the correct moment.

The deposit and withdrawal themselves are fiscally continuity: USDC remains USDC, even if you temporarily pass through aUSDC. There is therefore no capital gain event at the moment of depositing or withdrawing - only the realised interest portion is taxed as movable income.

Anyone who very actively jumps in and out of lending pools, chases exotic pools or sets up leverage loops does risk the tax authority reclassifying the interest as miscellaneous income (diverse inkomsten) at 33% or even as professional income. The boundary is not black and white - frequency, complexity and leverage are the key indicators.

🏦 Borrowing against collateral: no taxable income

If you borrow crypto on a protocol - for example 20.000 USDC against 1 BTC as collateral on Aave - this is not taxable income. A loan is by definition not an increase in net worth: you receive something and you must repay it. That principle is also explicitly enshrined in Belgian tax law for classical loans, and the tax authority applies it analogously to DeFi loans.

Depositing the collateral itself is also continuity: you retain economic ownership, you merely exchange control rights for a collateral position. In Cryptotax your BTC or ETH simply continues as a single lot, with a recognisable label "pledged as collateral on Aave".

Taxable consequences only arise after you use the borrowed tokens:

• Do you sell the borrowed USDC for ETH? That is an ordinary crypto swap, with the USDC as the cost basis (€20.000 if that is the amount you effectively borrowed).
• Do you hold the borrowed USDC and pay interest? The interest you pay is not tax-deductible in a private context, except in a professional context.
• Do you repay the loan? No taxable event - you simply close the position. Any profit or loss on the borrowed tokens was already taxed at the moment of the swap or sale.

Cryptotax automatically tracks the status of your collateral position, so you can see in the dashboard which loans are still open and which have been repaid.

🎁 Governance tokens and incentives

Many lending protocols award additional governance tokens or incentive tokens on top of the regular interest. Compound distributes COMP, Morpho has MORPHO rewards, MakerDAO has historically paid out MKR. For tax purposes these rewards follow the same line as airdrops and staking rewards:

• Taxable at the moment of receipt, at market value in EUR.
• Classified as movable income (30%) for predictable, recurring distributions - close to interest.
• Classified as miscellaneous income (diverse inkomsten) (33%) for more speculative, one-off or campaign-linked incentives.
• On subsequent sale: additional capital gain or loss on the difference between the value at receipt and the sale price, subject to the 10% capital gains tax with the €10.000 exemption.

Cryptotax classifies per protocol which rewards are interest-like and which are speculative - you do not need to make that assessment yourself per token.

⚠️ Liquidations: a forced disposal

What if the price of your collateral plunges below the liquidation threshold and the protocol sells part of your BTC or ETH to cover the loan? That is fiscally a forced disposal: you lose economic ownership of the liquidated tokens, and the difference between your original cost basis and the liquidation value is a capital gain or capital loss (minderwaarde).

Concretely: suppose you have 1 BTC with a cost basis of €30.000 (purchased in 2024) as collateral. During a crash, 0,5 BTC is liquidated at €40.000/BTC. You then realise a capital gain of 0,5 × (€40.000 − €30.000) = €5.000 on that liquidated portion. Under current rules that €5.000 falls within the €10.000 exemption, unless you realise other crypto capital gains that year. The liquidation fee retained by the protocol is not tax-deductible, but Cryptotax does include it in the net proceeds so that you are effectively taxed on what you actually retain.

For pre-2026 collateral the step-up rule also applies: your cost basis is the market value on 31 December 2025, not the original purchase price. Cryptotax applies that step-up automatically.

🔢 Worked example: an Aave strategy

Suppose your workflow for 2026 looks like this:

• January: you deposit 10.000 USDC into Aave V3 on Ethereum at ~5% APY.
• March: you deposit 1 BTC as collateral (value 31/12/2025: €60.000) and borrow 20.000 USDC at 4% interest.
• During the year: you use the borrowed USDC to buy 5 ETH at €4.000/ETH.
• December: you close everything neatly. You receive €520 interest on your original 10.000 USDC and receive 25 COMP-like reward tokens with a total value of €750. ETH is then at €4.500.

For tax purposes this breaks down as follows:

Total due: €381 in withholding tax on the combination of interest and governance rewards. The ETH capital gain falls neatly within the annual €10.000 exemption, unless you realise other crypto capital gains elsewhere in 2026. Would you like to know how Cryptotax calculates that cost basis exactly? Read how FIFO works.

📋 DVB assessment for intensive lending activity

The Dienst Voorafgaande Beslissingen (DVB - the Belgian advance ruling service) published a revised crypto questionnaire in mid-April 2026 in which lending and borrowing activity features prominently. Since that update the DVB applies a stricter threshold (25% instead of 50%) for classifying investments as part of private assets. Specifically for lending the DVB looks at:

• Leverage loops: reusing the same position multiple times as collateral to borrow again and again - often a red flag for speculative character.
• Frequency of rebalancing: adjusting deposits daily or weekly to chase the highest APY.
• Number of protocols: being simultaneously active on 5+ lending protocols indicates structured activity rather than normal management.
• Use of borrowed tokens for speculative purposes: borrowing to buy memecoins or leveraged ETH positions is rarely accepted as "normal management".

Anyone who sporadically lends USDC on Aave and sporadically borrows for concrete real-world expenses remains in principle within normal private asset management. Borderline cases can be tested via an advance ruling with the DVB. Cryptotax provides a per-protocol report that you can use as an appendix with your application or in consultation with your tax adviser.

❓ FAQ

Is lending crypto itself taxable?
No. The deposit itself is fiscal continuity - you retain economic ownership of the tokens, you merely receive a receipt token (such as aUSDC or cDAI) in return. A taxable event only arises when you receive interest.

How is interest from Aave, Compound or Morpho taxed?
Cryptotax treats DeFi interest by default as income from movable assets (art. 17 WIB 92), taxed at 30% withholding without automatic deduction at source - you declare it yourself in Box VII of Tax-on-Web. With intensive or leveraged activity the tax authority may reclassify it as miscellaneous income (33%) or professional income.

Do I need to declare a loan on a DeFi protocol?
Receiving a loan is not taxable income in itself and does not need to be declared as income. What does need to be declared: every disposal arising from the use of those borrowed tokens (sales, swaps, payments) is a taxable event. And in 2026 you must also report all foreign crypto accounts via the CAP declaration (CAP-aangifte).

What if my collateral is liquidated?
A liquidation is a forced disposal: you realise a capital gain or capital loss on the liquidated tokens, valued at the liquidation price. Under the capital gains tax this falls under the 10% rate above the €10k exemption, or under 33% miscellaneous income if the tax authority considers your activity speculative.

Is interest I pay on a DeFi loan deductible?
In a private context: no. Only within a professional activity (where you use crypto loans for your profession) can interest paid be deducted as a business expense. For most private individuals the interest you pay on Aave or Compound is simply a net cost.

How does Cryptotax track lending positions?
We automatically detect deposits, withdrawals, interest accrual and governance rewards via event parsing on Aave V2/V3, Compound V2/V3, Morpho, MakerDAO and Spark. Receipt tokens (aTokens, cTokens, mTokens) are recognised as continuity, and their underlying position is automatically synchronised with your wallet. For liquidations you receive a separate line with the forced disposal value.

✅ Try it today

Would you like to see how your lending and borrowing activity looks under Belgian rules? Connect your wallets and see for free how your deposits, interest, governance tokens and any liquidations are classified - neatly per protocol and ready for your tax return. Accountants can share client reports and generate audit-ready exports via the partner programme.

⚠️ Disclaimer: This article is purely informational and does not constitute individual tax advice. For specific cases: consult a recognised Belgian tax adviser or request a ruling from the Dienst Voorafgaande Beslissingen.