Finland Has Identified Thousands of Bitcoin Traders Who Owe Taxes
The Finnish government has revealed the number of taxpayers who owe taxes from bitcoin-related income. The country’s Tax Administration claims to have “different ways to combine information and identify people” who owe taxes from crypto profits, which are now “well over ten times higher than last year.” Also read: Russian Regulators Draft Law to Restrict Crypto […]
The Finnish government has revealed the number of taxpayers who owe taxes from bitcoin-related income. The country’s Tax Administration claims to have “different ways to combine information and identify people” who owe taxes from crypto profits, which are now “well over ten times higher than last year.”
Most Finns Have Not Paid Taxes on Crypto Gains
Most Finns have not reported income to the country’s tax department from the sale of cryptocurrencies in previous years, Kauppalehti newspaper reported last week. This year, “the profits made by Finns from cryptocurrencies were well over ten times higher than last year,” the news outlet added.
Senior Adviser from the Tax Administration’s Corporate Taxation Unit, Timo Puiro, detailed:
The majority of people have previously failed to report their bitcoin-related income, which we have found when we compare the information we collect to the tax information reported…The Tax Administration has extensive access to information, for example, to payment information, and we have different ways to combine information and identify people.
Metropolitan.fi elaborated, “the tax office has been given generous access to bank transfers and other data, which enables identifying people. By matching the transfers it is evident that in the past most citizens have not reported profits made with virtual currencies.”
Finland, with its cold weather and low-cost nuclear-based power, is no stranger to bitcoin mining. Both Bitfury and the now-defunct Kncminer have operated mining farms in the country. Today many smaller miners are still in business there. Other well-established crypto businesses are also located in the country, such as Localbitcoins and leading Nordic bitcoin broker Prasos.
Tax Department 30 Million Euros in the Hole
This is not the first time Puiro spoke about identifying undeclared income by Finns. In December of last year, he said the government had been analyzing bitcoin wallets for this purpose.
“We have analyzed more than 10,000 bitcoin wallets over several years, and in more than 500 cases we have found undeclared income which are taxable,” he emphasized at the time, adding that “Finland’s tax authority has identified bitcoin as one of the ‘high-risk focus areas’ and is prepared to redirect resources to ensure nothing falls through the gaps,” Bloomberg reported him describing.
Furthermore, Puiro claimed that “in analytics related to bitcoin, Finland is in a leading position and we have consulted quite a lot with authorities from other countries.”
While only 500 people were identified in December, Kauppalehti quoted the Tax Administration Office revealing last week that 3,300 people have now been identified as owing taxes from crypto-related transactions, adding:
The aggregate capital gain of the 3,300 persons identified will be about 100 million euros, so the taxpayers’ share of the pot would be around 30 million euros.
“Bitcoin gains are taxed as capital income in Finland…They are treated the same way as dividends, rent or other similar income,” Metropolitan.fi explained. “The tax percentage for capital income in Finland is 30% (in 2018) for sums under 30,000 euro and 34% in excess,” the publication added.
Puiro also said last week that he hopes those who have made a profit on cryptocurrencies will voluntarily declare the income to the tax authority. He emphasized that if taxpayers fail to report income related to cryptocurrencies, “the criterion of criminal tax evasion may be fulfilled.”
What do you think of Finland’s method of identifying crypto traders who owe taxes? Let us know in the comments section below.
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