Finnish authorities have identified individuals who earned income on cryptocurrencies but failed to pay the taxes. As the regulators say, there are over 3,000 such people and in total their gains exceed 100 million euros.
The Finnish casino website states that gains on cryptocurrency are treated like capital gains in Finland. Which means they are taxed similarly to rents and dividends. For gains under 30,000 euros the tax is 30%, and for gains over 30,000 it is 34%. This means that the taxpayers missed out on 30 million euros as a result of the undeclared income.
Taxing gains on cryptocurrencies is a difficult task. Most users have several accounts on different exchanges. Some of these exchanges have weak customer identification rules. Nevertheless, the Finnish authorities are confident in their ability to identify people who have earned profits on cryptocurrency trading. “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 Finnish Tax Administration has extensive access to information, for example, to payment information, and we have different ways to combine information and identify people,” – Timo Puiro, a senior adviser in the Tax Administration commented.
Last year Mr. Puiro commented on the administration’s plan to analyze Bitcoin wallets. He said that as a result of analyzing over 10,000 wallets, they found 500 people who had not declared their income to the authorities. Mr. Puiro also emphasized the Finnish government’s stance on the issue. He said that the regulators regard Bitcoin as a high-risk focus area and will devote a lot of resources to monitor people’s gains. “In analytics related to bitcoin, Finland is in a leading position and we have consulted quite a lot with authorities from other countries,” – he commented on the issue (follow this link to read more about the issue).
Timo Puiro advised people to declare their gains to the authorities voluntarily. Otherwise, they could face criminal tax evasion charges. With Finnish government’s access to bank transactions, they can easily match transactions to identify people with undeclared income. So, those trying to hide their profits to avoid paying taxes, will still eventually have to face the regulators.