Mika Siivonen, a tax expert from the Finnish Tax Administration, explained that a lower number of reported traders often corresponds to a higher number of investors who have yet to declare their income taxes.
The Finnish Tax Administration has discovered that some digital asset traders refuse to report their income taxes on crypto gains. According to a local news report citing a press release from the country’s tax agency, unreported taxes for the year 2023 reached €30 million, or approximately $31.9 million.
Finnish Authorities Demand Investors to Report Taxes
The tax authority said it worked with several crypto exchanges to obtain the information through the international data exchange, showing that many investors in the country have not declared their taxes for 2023.
To combat this issue, the tax administration has emphasized the importance of reporting all income generated from the use or mining of virtual currencies, including losses incurred from the sale of virtual currencies.
In Finland, digital asset traders are legally required to report up to 34% of their crypto gains, while miners are subjected to pay 44% in taxes. The taxation of crypto income in the country is categorized as capital income, with earnings from mining taxed as earned income.
Under the law, failure to declare income from virtual currencies, even those sold at a loss, violates tax regulations and is subject to penalties.
Due to the legal implications, the tax administration has urged all individuals who received income from virtual currencies in 2023 to ensure they declare their income accurately and in accordance with tax laws or face the legal implications of their actions.
In addition to facing tax obligations, individuals who fail to declare their income are subject to tax increases and late penalties, with the possibility of criminal sanctions for non-compliance.
£10 Million Unpaid Taxes Recovered
The tax authorities said about 9800 investors reported their taxes for the year 2022. In the year before, a total of 16,000 traders declared and paid their dues to the taxman for the year 2021.
Mika Siivonen, a tax expert from the Finnish Tax Administration, explained that a lower number of reported traders often corresponds to a higher number of investors who have yet to declare their income taxes. He also said the situation may indicate that these investors have sold fewer assets for the year.
He further noted that supervision has intensified for customers whose information was found in the materials received from the international data platform.
Using the information from the exchanges, the tax agency tracked down some of the investors, who have now paid a total of £10 million, with the remaining £20 million to be paid.
International Data Exchange to Go Global in 2027
Both miners and investors have until next month to declare and pay the taxman or face the legal repercussions. However, the deadline for submitting the pre-filled tax return varies, with the majority of wage earners having deadlines on May 7, 14, or 21.
Siivonen said the Finnish Tax Administration anticipates a substantial increase in information regarding investors’ virtual currency transactions on foreign exchanges by 2027 compared to the current levels.
He also disclosed that tax authorities worldwide will be able to obtain automated information regarding virtual currencies through international data exchange mechanisms in the future.
Siivonen explained that this process would be enabled by directives such as the COUNCIL DIRECTIVE amending Directive 2011/16/EU on administrative cooperation in the field of taxation, commonly referred to as DAC8 in the European Union, and the crypto-asset reporting framework (CARF), both of which were approved last year.
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