Last year, Finns actively announced their crypto profits. However, according to the Tax Administration, there should be more notifications.
Cryptocurrencies have started to interest an increasingly large audience. In 2021, the crypto market saw a big upswing, which brought many crypto investors millions of euros.
Special expert in tax administration Juho Hasa tells Iltalehte that about 15,300 people filed a report about handing over and using cryptocurrencies last year. The difference from the previous year is huge, when only about 3,400 notifications were made.
Last year, the reported selling prices of cryptocurrencies were 3.4 billion euros, profits 550 million and losses 9 million. In 2020, the disposal prices were again 190 million euros, profits 32 million and losses 2.85 million.
It is estimated that around 150,000–200,000 Finns work with cryptocurrencies. 15,300 announcements are few compared to this.
– The numbers are such that there should be more notifications. On the other hand, in the comparison, it should be noted that there are also many crypto owners who do not sell or use them at all, in which case there is no need to report them. Still, it can be said that the number of notifications for 2021 is too small, says Hasa.
Crypto trading was fierce last year
2021 was a hot year in the crypto market. The exchange rates skyrocketed and the trade took place.
– We have noticed that reporting in units and amounts go hand in hand with the exchange rates of cryptocurrencies. In 2021, the exchange rates of major cryptocurrencies, i.e. bitcoin and ether, rose up to tenfold. The rates of smaller cryptocurrencies rose even more – up to a hundredfold, says Hasa.
This was also reflected in the number of notifications. According to Hasa, many crypto-investors have clearly expected a price increase, which is reflected in the use of the acquisition cost assumption. Many people who have sold cryptos in the last year have used it because they have previously bought cryptocurrency at a low rate.
Hasa says that a cycle can be observed in cryptocurrency exchange rates, in which three periods of great growth are highlighted in 2013, 2017 and 2021. After these years, there has been a recession, which has also been called the crypto winter.
– Who knows if cryptos will rise again, but it would seem that cryptos are here to stay.
Why not inform the taxman?
Hasa says that the Tax Administration has interviewed both people who declared their income and those who did not. In these interviews, information has been obtained about what kind of challenges there are or what the reason for non-reporting is.
According to Hasa, in more common cases, failure to report is due to forgetfulness.
– The tax administration does not receive information for pre-filled tax returns as a basis for taxation from third parties, for example from crypto platforms. If you have made sales in February of the previous year, they can simply be forgotten, says Hasa and continues:
– People who work with cryptocurrencies can also be those who have almost no experience with taxation. They have not done any kind of trading with, for example, securities or shares before. Basic information on taxation and reporting may therefore be incomplete.
One pure reason can also be that you simply don’t know how to calculate profits and losses, or realize that income has come.
Remember this!
According to Hasa, every crypto investor should be able to find out what the selling prices have been, i.e. how much crypto has been sold or used.
– After this, it should be possible to determine the profits and losses from each event that is realized in taxation. The calculation of taxable income must be done per transaction, but the final result of the calculation can be reported separated into profitable and loss-making transactions. If, for example, a thousand transactions had been made, it would be quite a job to enter them, Hasa states.
– I could see that the problem is not that reporting has been made difficult, but that there must be a problem in the steps preceding it, such as the calculation of the income itself, if reporting has not taken place.
Hasa stresses that crypto investors should save reports from crypto platforms at regular intervals.
– Unfortunately, platforms go bankrupt, for example, and then events are no longer available anywhere. It’s a really difficult situation for us and the customer.
Income should be declared, because according to Hasa, it is easy to track down those who have not declared it.
– As an authority, we have good opportunities to receive information from third parties both from home and abroad. If you use crypto-platforms, we will receive information within the framework of regulations when necessary. This information received from third parties is then compared with the reported information. If notifications have not been made, we can approach the customer based on that.
– If we are talking about large sums, i.e. income has been generated for example hundreds of thousands of euros, there are fewer situations where a declaration has not been made. They know this kind of thing gets caught. And if this happens, it often leads to criminal proceedings.
Hasa also reminds us of situations where losses have been made on crypto trades.
– If there has been a loss from the trades, the loss is tax deductible, but it requires that you have made the calculations and are able to show them. Unfortunately, we see situations where the customer states, for example, that he invested 50,000 euros and lost 40,000 euros, but no more precise calculations can be offered in the first step.