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Cryptocurrency taxpayer numbers explode in Finland

Those who make profits in cryptocurrencies might not necessarily know they need to pay taxes. 

Bitcoin mustalla taustalla.
The logo of a well-known variety of cryptocurrency, Bitcoin. Image: Jakub Porzycki/NurPhoto/Shutterstock/All Over Press
Yle News

Finland's Tax Administration says that around 150,000 people declared income in cryptocurrencies last year.

That's a huge increase on 2020, when some 3,400 people declared income in cryptocurrencies.

The Tax Administration says the increase is down to active marketing of digital currencies and a rise in their value over the last year.

In 2020 the tax authorities recorded some 174 million euros in cryptocurrency gains.

Inspector Timo Puiro said that cryptocurrencies are no longer a niche phenomenon, and a lot of Finns' money is now tied up in them.

"Lots of people have realised gains in the last year," said Puiro. "Now it is finally time to pay taxes on trading and mining [these currencies]."

Cryptocurrencies are based on blockchain technology which, put simply, are digital assets that can be sent peer-to-peer without the need for a centralised party, such as a bank. This decentralisation bypasses the services — and the scrutiny — of traditional financial institutions.

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Typical investor a 20-40-year-old man

Last year the Tax Administration looked at who was investing in cryptocurrencies in Finland. According to the administration, the goal was to understand investors better and help them to pay their taxes correctly.

They found that the typical investor was a male aged between 20 and 40. Puiro says that many of them struggle with the administration around an investment like this.

"On the tax return there can be challenges, and they might not know how to calculate profit and loss," said Puiro. "Declaring income was also regarded as challenging."

"Investors can also be confused, thinking 'do I really have to pay taxes on this'."

Gains from cryptocurrencies have to be notified to the tax authorities by the taxpayer. The administration says it is making changes to its online service this spring in order to make that process a little easier.

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