Guide to declaring crypto taxes in Finland (2022)
Find out how to calculate and declare cryptocurrency taxes in Finland
Updated: Aug. 2, 2022, 1:10 p.m.
This article aims to serve as a complete guide on calculating and paying taxes on cryptocurrency (for example, Bitcoin and Ethereum) for individuals in Finland. Whether it’s your first time declaring taxes on cryptocurrencies or you are an experienced crypto evangelist, you should find this guide helpful. In this guide, we will be covering:
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Important dates
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How cryptocurrencies are taxed
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Detailed information about different transaction types
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How to submit your tax report to Vero Skatt
This guide will be updated and maintained regularly to account for changes made by the local tax authority (Vero Skatt) and new types of transactions. Suppose you find any errors or outdated information. In that case, it is greatly appreciated that you let us know by sending an email to support@divly.com or via our support chat at the bottom right corner of our website.
Any tax-related information provided by us is not tax advice, financial advice, accounting advice, or legal advice and cannot be used by you or any other party for the purpose of avoiding tax penalties. You should seek the advice of a tax professional regarding your particular circumstances. We make no claims, promises, or warranties about the accuracy of the information provided herein. Everything included herein is our opinion and not a statement of fact.
Important dates 2022
March-April - You’ll receive your tax return sometime in March or April.
1 April - The deadline for updating and submitting your tax return if your tax return shows 1 April as the deadline.
10 May - The deadline for updating and submitting your tax return if your tax return shows 10 May as the deadline.
17 May - The deadline for updating and submitting your tax return if your tax return shows 17 May as the deadline.
24 May - The deadline for updating and submitting your tax return if your tax return shows 24 May as the deadline.
How are cryptocurrencies taxed in Finland?
In Finland, you have to pay taxes for any income earned on your crypto transactions. Spending and exchanging cryptocurrencies is subject to a capital income tax of 30-34%. Income from mining crypto is subject to a progressive earned income tax and municipal taxes.
Capital Income Tax
You should report any form of Bitcoin or other cryptocurrencies sale as a capital gain. This article will walk through the long list of detailed scenarios that involve capital gains tax. In general, you can expect to declare and pay capital gains tax on your cryptocurrencies in the following situations: - If you have exchanged a cryptocurrency for one or more other cryptocurrencies. - If you have traded a cryptocurrency for a fiat currency (e.g., USD or EUR). - If you have paid with cryptocurrency when buying a product or service.
Calculating capital gains for income tax You should calculate the gains or losses on any transaction that sees an exchange of ownership of a cryptocurrency to another person against payment. To determine your gains and losses, you should subtract the acquisition cost, including fees, from the sales price. Vero Skatt accommodates the FIFO (First-in-First-out) method to calculate the cost basis.
If you’ve made a loss on a transaction, you can deduct it from your gains on the sales of other crypto assets in the tax year for five subsequent years. Capital gains are tax-exempt if the total sales prices in all asset transfers do not exceed 1000 euros.
Example:
Michael purchases 2 ETH for €2000 per coin in August 2021 and buys another 1 ETH for €3000 per coin in September 2021. In November 2021, Michael sold 1 ETH for 10 BNB valued at €400 each. He uses the FIFO method to calculate the cost basis of his sold ETH. Therefore, the first ETH Michael sold is considered to be the first ETH that he bought. The acquisition price he must use for his capital gains calculations is €2000. The taxable gain is the difference between the purchase price of the BNB and the acquisition price (€400 x 10 - €2000). Michael reports a capital gain of €2000.
Submitting capital income tax: You can read more about submitting your taxes at the end of the guide.
Earned Income Tax
If you have earned crypto for some form of work or effort, you need to pay typical income taxes. You’ll be liable for tax on your salary and other income, such as that from mining.
Depending on which municipality you belong to, you are subject to a (16.5%-23.5%) municipality tax. The average municipal tax rate is 19.17%.
Earned Income Tax Rates
| Income Bracket (€) | Marginal Tax Rate | Effective Tax Rate | Tax (€) |
|---|---|---|---|
| 0-19,199 | 0% | 0% | 0 |
| 19,200-28,699 | 6.00% | 0% - 2.00% | 0-570 |
| 28,700-47,299 | 17.25% | 2.00%-8.00% | 570-3779 |
| 47,300-82,899 | 21.25% | 8%-18% | 3779-14904 |
| 82,900+ | 31.25% | 18%-31.35% | 14904+ |
Submitting income tax: You can read more about submitting taxes at the end of the guide.
Detailed information on different transaction types
Certain transactions trigger the types of taxation listed above differently. Below is a master list for your reference; we will go through each in detail in this guide. Each transaction has an associated tax classification and the corresponding label in Divly for those using our service to automate their tax reporting.
| Transaction Type | Tax Classification | Divly Label |
|---|---|---|
| Buy crypto | None | Buy |
| Sell crypto | Capital Income Tax | Sell |
| Trade crypto for crypto | Capital Income Tax | Traded crypto |
| Initial Coin Offering (ICO) | Capital Income Tax | Traded crypto |
| Purchase goods & services with crypto | Capital Income Tax | Goods/Services |
| Pay trading fee with crypto | Capital Income Tax | *Fee Included in Trade |
| Pay transfer fee with crypto | Capital Income Tax | *Fee Included in Transfer |
| Transfer crypto between your own wallets | None | Transfer |
| Lost or stolen crypto | None* | Lost/Stolen |
| Give crypto as a gift | None | Gifted Away |
| Receive crypto as a gift | Gift Tax | Received Gift |
| Donate crypto | None* | Donation |
| Airdrop | Capital Income Tax | Airdrop |
| Hard Fork | None | Fork |
| Mining | Earned Income Tax | Mining |
| Staking | Capital Income Tax | Staking Reward |
| Income (e.g. freelancing, salary,rewards, online gaming) | Earned Income Tax | Income |
| Lend out Crypto | Capital Income Tax | Interest Received |
| Borrowing Crypto | Capital Income Tax | Interest Paid |
| Margin Trading | Capital Income Tax | Realized Profit/Loss |
| Futures / Derivatives Trading | Capital Income Tax | Realized Profit/Loss |
| DeFi | Capital Gains Tax | In progress, not yet available |
| Trade/Mint NFT | Capital Gains Tax | In progress, not yet available |
Buy Crypto / Buy Crypto with Fiat
There are no taxes involved when buying crypto. However, you need to ensure that you keep track of the price you paid for it for your cost basis calculation. If you purchased the crypto in a foreign currency (e.g., USD or SEK), make sure to convert it to the value in local currency on that day.
You can add the trading fee to the cost basis when buying crypto. Adding the trading fee will help reduce your taxes. For example, if you purchase 1 ETH for € 1,000 and pay a trading fee of € 10. Your cost basis for 1 ETH is 1,000 + 10 = € 1,010.
Sell Crypto / Sell Crypto for Fiat
Selling cryptocurrency will always require you to declare capital gains tax, whether at a profit or loss. Once again, it’s essential to calculate the selling price in local currency at the time of sale.
You can subtract the trading fee from the sale price when selling crypto. Subtracting the trading fee will help reduce your taxes again. Let’s continue with the previous example from above, where we now sell 1 ETH for € 2,000 and pay a trading fee of €30. The profit for 1 ETH is 2,000 - 1,010 - 30 = € 960.
The order in which you sell crypto is the order in which you’ve acquired the crypto unless you can prove otherwise.
Trade Crypto for Crypto
In Finland, trading crypto for crypto is a capital gains tax event. You must pay capital income tax on the gains made on the cryptocurrency you sold. To calculate the gain or loss, you should use the market value of the bought cryptocurrency in euros. For example, if you sold 1 BTC for 10 ETH, the selling price is the value of 10 ETH in euros.
Finally, you would account for the cost basis of the Ethereum that you purchased. The cost basis is the same as the value above, 10 ETH in euros on the day you receive the ETH. Suppose you cannot determine the market value of either cryptocurrency. In that case, the purchased crypto inherits the cost basis of the sold crypto. In this situation, no gain or loss is recognized. However, you must still report this transaction to the tax authorities.
Initial Coin Offering (ICO)
An ICO is a way for blockchain companies to sell pre-mined crypto to potential investors. When you invest your crypto (usually Ethereum) in a new project, you are provided a token for that project. From a taxation point of view, this functions the same as a crypto-to-crypto trade. Essentially, you send cryptocurrency in exchange for a token from a new project. You follow the same principle where you sell your crypto for the value of the ICO token in local currency. The crypto you send is subject to capital income tax, and the received token inherits its cost basis.
Purchase Goods & Services with Crypto
When you purchase a good (e.g., new computer, amazon gift card) or service (e.g., VPN service) using crypto, you must pay capital income tax on any resulting gains. Like selling crypto for fiat, the selling price is what the good or service costs in your local currency.
Pay Trading Fees in Crypto
Typically, when you trade crypto for crypto, you will also have to pay a trading fee in crypto. In these cases, you need to convert the crypto you used to pay for the trading fee into your local currency and then pay capital gains on it. Trading fees also contribute to the cost basis for the purchased cryptocurrency.
Pay Transfer Fees in Crypto
When you pay transfer fees in crypto, you have to pay capital gains tax on the crypto used to pay the fees.
Transfer Crypto Between Your Own Wallets
Transferring crypto between your wallets is not a taxable event (this includes sending crypto to your account on an exchange). You must track these transfers properly to avoid paying unnecessary taxes!
Lost or Stolen Crypto
There are no deductions for stolen property except for businesses.
Give Crypto as a Gift / Receive Crypto as a Gift
For taxation purposes, the acquisition cost or cost basis of the received gift is the value determined by the tax authorities. In general, we assume this to mean the market value of the received crypto. However, suppose the recipient sells their received crypto within a year of receiving the gift. In that case, the recipient would inherit the donor’s cost basis.
If the total value of the gifts you receive from the same donor over a 3-year span is more than €5000, you must pay gift tax. Depending on who gives the gift to you, you are taxed differently.
Bracket 1: Closest relatives and family members
| Market value of gift (€) | Tax at the lower limit (€) | Tax rate on the value above the lower limit (%) |
|---|---|---|
| 5,000-24,999 | 100 | 8 |
| 25,000-54,999 | 1,700 | 10 |
| 55,000-199,999 | 4,700 | 12 |
| 200,000-999,999 | 22,100 | 15 |
| 1,000,000+ | 142,100 | 17 |
Bracket 2: other than close relatives
| Market value of gift (€) | Tax at the lower limit (€) | Tax rate on the value above the lower limit (%) |
|---|---|---|
| 5,000-24,999 | 100 | 19 |
| 25,000-54,999 | 3,900 | 25 |
| 55,000-199,999 | 11,400 | 29 |
| 200,000-999,999 | 53,450 | 31 |
| 1,000,000+ | 301,450 | 33 |
You must file a gift tax return within three months from the date of the gift. You can file your gift tax in Vero’s online tax portal MyTax.
Donate Crypto
Vero Skatt does not provide concrete guidelines for donations paid in crypto. However, we can assume regulations are in line with fiat donations. In Finland, donations in money are only tax-deductible by corporations. The purpose of the donation must be to support scientific research, arts, or Finnish cultural heritage.
Airdrop
An airdrop is typically considered a gift from the token holder or blockchain. Airdrops are usually a very small or negligible amount.
There are no concrete regulations regarding airdrops yet. However, we were informed by the Finnish Tax Administration that it is best to declare your airdrops as income until regulations are more defined. We will update this guide as Finland's crypto tax regulations evolve.
If you receive an airdrop based on your ownership of another crypto, we believe it should then be considered capital income, as with staking rewards.
Hardfork
A hard fork occurs when the blockchain splits. In that case, you are gifted crypto based on your ownership of the forked cryptocurrency. The received cryptocurrency has a cost basis of €0. You must pay capital income tax on any gains from selling the received crypto upon sale.
Mining
Income earned from creating cryptocurrencies through processes such as mining is not considered income from investment, assets, or capital. Instead, mining is subject to an earned income tax. You must report the value of your mining income in euros. It is also possible to calculate your income from mining per day or per month based on the average exchange rate of that period. But you have to stay consistent with this period throughout the year.
You can deduct expenses incurred while mining from your income. Should a miner wish to deduct expenses from their income, they must determine the proportion of their energy consumption used in mining. Any energy used for the computer or device used in mining that is not directly involved in mining is not tax-deductible. The purchase price of mining equipment is also deductible. If you use the equipment for personal use from time to time, you may still deduct some expenses. The amount you can deduct is dependent on how often you use the equipment for purposes other than mining.
You can deduct 25% if you provide evidence of occasional use of your equipment to earn mining income.
You can deduct 50% if you provide evidence of regular use of your equipment to earn mining income.
You can deduct 100% if you can provide evidence that your equipment’s primary use is for earning mining income.
However, suppose the useful life of the equipment is more than three years. In that case, you must deduct expenses according to a series of depreciation expenses of no more than 25% per year.
Staking
Staking, an alternative to mining, contributes to your capital income and is seen as a capital gain. This classification is different from mining because staking is a reward for owning crypto assets. You must report the value of your staking income in euros at the time you receive the tokens. This value is also considered the acquisition cost.
Lending Your Crypto
There are no concrete guidelines for interest received specifically from crypto lending. It is safest to assume it works the same as with fiat lending. The interest you earn from lending is taxed as capital income. You must report the value of the interest received in euros as it was when you received it.
Borrowing Crypto
Interest expenses are deductible if the loan was for the production of income, such as interest income. Then your interest expenses are fully deductible from your capital income. If your costs exceed your capital income, 30% of your costs can be credited from your earned income.
Income From Other Activities (e.g. freelancing, salary, rewards, online games)
Taxable earned income includes salary as well as benefits or compensation received.
Regarding crypto, Vero Skatt primarily refers to online games and mentions that earnings from online games are based on players’ activity and therefore taxed as income. Consequently, we can assume that activities performed through Coinbase Earn are considered income as some action was performed in exchange for crypto. If you have received a reward from referring a friend, sharing a post, or any other required effort, then you need to declare the reward for income tax purposes.
In some online games, you can earn a virtual currency. You are only taxed upon converting this virtual currency to a tradable cryptocurrency, fiat, or other assets (cashing out of the game). Any losses you make in a game are not tax-deductible. Those losses are seen as losses from recreational activities and considered living expenses. If you participate in a game of chance, you may be tax-exempt if the lottery belongs to an EEA country.
You need to report the value of the income you receive from other activities in euros at the time of payment.
Margin Trading, Futures, and Derivatives Trading
There are no specific regulations regarding trading with derivatives. However, Vero Skatt has indicated that crypto derivatives are subject to securities and derivatives regulations. Margin trading involves borrowing to take leveraged positions on crypto. Often the outcome of the trades is provided as realized profit or loss after margin fees are accounted for. You will have to pay capital income tax on this realized profit. Losses made on the transfer of property can be deducted from gains made during the tax year and the following five years.
DeFi
DeFi is an abbreviation for decentralized finance. Vero Skatt does not have concrete regulations on DeFi. We will update this section when Vero Skatt updates its regulations or when we hear back from Vero Skatt regarding our information request. However, it is essential to note that you still need to pay tax on any income from capital.
NFT
Although there are no concrete guidelines, we were informed that NFTs should be treated as other cryptocurrencies in a call with the Finnish Tax Administration. Therefore, you pay capital gains tax on your NFT transactions.
If you have minted (created) an NFT, this is likely also seen as a trade. Therefore, any gains made on the sale of the cryptocurrency used to purchase the NFT is taxable.
How to submit your tax report to Vero Skatt
Once all the tax calculations are done, and Vero Skatt’s tax portal is open, it is time to declare your taxes before the deadline in May. You can submit your taxes online or by mail. We will primarily focus on the online portal in this guide. Should you want to call Vero Skatt, you can do so on weekdays from 9 am to 4.15 pm and 9 am to 3 pm in July via 029 497 050.
To report your crypto taxes, you can use Vero Skatt’s online tax portal, MyTax.
Navigating your way through Vero
First, under Your tax types, navigate to individual income tax and select the tax year for which you are declaring your crypto holdings. You can then click on Check your pre-completed tax return. From there, click on Correct. Check your pre-completed tax return may not be present. In that case, your tax return is not yet available. However, you can already submit your crypto taxes beforehand. You can do this via Filing income and deductions.
If this is your first time declaring crypto transactions, you can skip to the Other income stage and select yes for Capital gains. You can then click Add new transfer, select Other property from the property details, and enter “Virtual currency” in the field Description of other property.
If you’ve previously declared crypto transactions, you can see them under Capital income in the Pre-completed income and deductions tab. Here you will be able to make amendments. You need to provide the names of the exchanges you’ve used under the name of buyer or other recipient. You do not need to fill out the Personal ID, Business ID, or birth date.
You can now report crypto transactions in two ways. Either you can do so one transaction at a time or all at once. If you only have a few transactions, it may be quicker to choose one-by-one.
Report full-year sales all at once
There are several requirements you will need if you are going to report all your transactions at once.
If you have made both gains and losses on your transactions, you must enter two separate capital gains calculations in the MyTax input fields. The first is for transactions that resulted in gains and the other for transactions that resulted in losses. You will have to provide the total sales prices and the sum of acquisition costs for all transactions that resulted in gains. You will also have to provide the total sales prices and the sum of acquisition costs for all transactions that resulted in losses.
If you are entering all your year’s selling totals at once, you need to do the following. First, you need to enter your selling totals. You have to do this separately for all transactions that resulted in gains and those that resulted in losses.
You need to enter 31 December 2021 as the Selling date. Then for the Selling price, you should enter the combined selling prices of every transaction on which you’ve made gains.
You must then enter the acquisition details in Acquisition details and costs. You can enter 1 January 2021 as the Acquisition date. Then for Acquisition price or un-depreciated acquisition cost, enter the total acquisition price for every transaction on which you’ve made gains. You will have to repeat this process for transactions that resulted in a loss.
Make sure to look at the section below regarding the attachments you need to provide for your tax returns.
Report transactions one by one
For each transaction, fill in the date it occurred as the Selling Date. Then for Selling Price, enter the value of the virtual currency in euros at the time of the transaction. You must enter the acquisition details in Acquisition details and costs. For the Acquisition date, you can input the date you received/bought the currency. Under Acquisition price or underappreciated acquisition cost enter the value in euros at the time of purchase.
File to attach to your tax return
Finally, you will find an Add file button. Here you must select Attachment regarding virtual currencies. The file you upload must be a pdf that contains the gains or losses for each transaction using the FIFO method of accounting.
Reporting Mining, Staking, and Airdrop Income.
Mining income is reported in the Other income section of MyTax. You can enter your mining expenses under Deductions -> Expenses for the production of income -> Expenses for the production of other income than wage income.
Income earned from staking crypto must be entered under Other capital income. Any deductions must be reported here as well. We are of the opinion that airdrops should also be declared under Other capital income. We will update this guide when Vero Skatt updates its regulations.
Filing your returns on paper.
We do not go in-depth here to discuss filing taxes on paper. However, should you want to report your taxes via a paper filing, you need to be aware of two forms. First is Form 9 , which is for capital gains and losses, and second is Form 50A for your mining income.
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