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Finland tax authorities matching Bitcoin transactions and bank transfers

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Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#41

Post by doikor »

mcny wrote: post #34
hedgew wrote: post #22

Earlier quoted context omitted.

That doesn't sound right. The authorities in Finland specifically tax gains made with cryptocurrencies. You only pay tax if you make profit on any individual trade. But you can not deduct trades that made a loss. It's not exactly a wealth tax, but it's also hard to consider a capital gains tax because you can't deduct losses. Treating other investment products this way would probably have horrific results, because it…

This does sound strange. My understanding is that here in the US if you win a huge jackpot at a casino but then spend it all on slots (I don't know how or why anyone would do that but this is a thought experiment) over the year, you effectively don't owe any income tax on that jackpot.

On casinos and jackpots the individual doesn’t owe any taxes made by gambling winnings as they are paid by the casino/whatever in Finland.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#42

Post by hedgew »

mvindahl wrote: post #40
hedgew wrote: post #7

All they're doing is looking for bank transactions to crypto exchanges in citizens' accounts. What this article doesn't tell, is that the current cryptocurrency taxation in Finland is unreasonable. You pay 30-34% tax on any profit, but you can not deduct losses. If you had bought 1 BTC at $1000, another at $14000, and sold both at $3000 you would owe $600 in taxes even though you lost $9000. You can imagine how peopl…

Is this really the case? My expectation would be that you would be taxed on the net profits at the end of the year but would have no deductions on net losses at the end of the year. It's a bit skewed but I'm pretty sure that's how profits from overseas online gambling is taxed here in Denmark. Either way, it would make sense to tax cryptocurrency trading by using the same tax code as other kinds of overseas online ga…

It is. Net profits are not taxed, but the profits of any profitable trade are. Trades resulting in loss are ignored.

The tax authorities interpreted cryptocurrencies not as a currency or as a financial asset, but as "trade agreements", which allowed them to take this stance. I'm not sure why they would skew the taxation so far against taxpayers' favor.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#43

Post by anc84 »

AznHisoka wrote: post #10
hedgew wrote: post #7

All they're doing is looking for bank transactions to crypto exchanges in citizens' accounts. What this article doesn't tell, is that the current cryptocurrency taxation in Finland is unreasonable. You pay 30-34% tax on any profit, but you can not deduct losses. If you had bought 1 BTC at $1000, another at $14000, and sold both at $3000 you would owe $600 in taxes even though you lost $9000. You can imagine how peopl…

Jesus, you can’t deduct losses? If it is only for crypto, I gotta believe its a perverse way to dissuade citizens from investing in crypto. These crypto tax articles become less and less relevant in the coming tax year as people are going to be filing losses , not gains. I expect headlines like “How to make sure you add up your crypto losses to the full amount”

> investing in crypto

LOL

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#44

Post by doikor »

hedgew wrote: post #29
thisisit wrote: post #24

Earlier quoted context omitted.

So, Finland doesn't have tax loss harvesting at all or is it specific only to cryptocurrency trading?

It only applies to cryptocurrencies.

Well not really. It is just that you can only deduct losses on things that the government deems to be investments which in the case of crypto currencies they don’t.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#45

Post by mvindahl »

hedgew wrote: post #22
onion2k wrote: post #13

Earlier quoted context omitted.

You pay 30-34% tax on any profit, but you can not deduct losses. Whether you made a profit or not doesn't have to be a consideration as far as tax goes. You pay a percentage of the capital amount when you choose to liquidate your asset. It's effectively a wealth tax. There are lots of taxes around the world that work this way. It sucks if you've made a loss, but that's not really the government's problem.

That doesn't sound right. The authorities in Finland specifically tax gains made with cryptocurrencies. You only pay tax if you make profit on any individual trade. But you can not deduct trades that made a loss. It's not exactly a wealth tax, but it's also hard to consider a capital gains tax because you can't deduct losses. Treating other investment products this way would probably have horrific results, because it…

If you buy stocks in a publicly traded Finnish company, then you're taking on a risk in the hope of making a profit. But you are also putting your money at work in the Finnish economy, stimulating job creation and growth. Everybody wins, hopefully.

If, on the other hand, you put down your money in bitcoin or at the online blackjack tables then you're gambling, not investing. Win or lose, your gamble creates zero domestic growth. Why should any government incentivize that?

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#46

Post by craigsmansion »

Jhsto wrote: post #20
hedgew wrote: post #7

All they're doing is looking for bank transactions to crypto exchanges in citizens' accounts. What this article doesn't tell, is that the current cryptocurrency taxation in Finland is unreasonable. You pay 30-34% tax on any profit, but you can not deduct losses. If you had bought 1 BTC at $1000, another at $14000, and sold both at $3000 you would owe $600 in taxes even though you lost $9000. You can imagine how peopl…

This is even worse if you are a student who receives government aids: transactions are regarded as income (whether loss or profit) by the social insurance institution. So in other words, if you buy Bitcoin for 1000 euros and sell it at 500, you have made efficiently 500 euros in "income." With the notion of the parent post, this makes trading unviable, because if you exceed 12K€ in income a year (in any form, be that…

If one is a student who receives government aid, maybe one shouldn't be speculating in crypto-currencies.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#47

Post by Jhsto »

notahacker wrote: post #26
Jhsto wrote: post #20

Earlier quoted context omitted.

This is even worse if you are a student who receives government aids: transactions are regarded as income (whether loss or profit) by the social insurance institution. So in other words, if you buy Bitcoin for 1000 euros and sell it at 500, you have made efficiently 500 euros in "income." With the notion of the parent post, this makes trading unviable, because if you exceed 12K€ in income a year (in any form, be that…

Whilst the apparent double counting doesn't seem fair, it also doesn't seem like a good idea for students who rely on government aid for their living costs to be speculating in risky exotic financial assets...

I understand where you are coming from, but let me add that this method of counting income applies to any investment income.

So say you put money into an index fund, but something unexpected happens. If you need to liquidate your savings while being a student, the government will slap your fingers for trying to think long-term.

Either way, I admit this only affects the poor -- if you are a bit better off you should be able to afford to incorporate an LLC for 2500€ (half a year rent where I live). By making yourself the sole owner of the company, you can get around all these problems, as juridically the LLC is a separate entity from you doing all the trading. This kind of setting is legal, but practically off limits for many.

Government aid for students is also practically unconditional in Finland and usually covers your rent and then some, basically making your own life instantly ramen profitable. This sounds utopistic to many, and it certainly is, but I think so much potential is lost by the government discouraging young people to take risks on their own.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#48

Post by StavrosK »

acdha wrote: post #39
StavrosK wrote: post #9

Earlier quoted context omitted.

Not if it's something like Monero.

They can still require mandatory reporting when real money enters and leaves the system. Everyone is going to need to convert currency into Monero or vice versa and governments routinely require disclosure information at such points.

Yes, for sure. But there can be a secondary market if people accept Monero directly, so you don't have to convert.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#49

Post by brownbat »

mcny wrote: post #32
notahacker wrote: post #26

Earlier quoted context omitted.

Whilst the apparent double counting doesn't seem fair, it also doesn't seem like a good idea for students who rely on government aid for their living costs to be speculating in risky exotic financial assets...

This is kind of off topic but we should really get rid of all income thresholds for government services and safety nets. They divide people and make them resent one another. I think we should instead make these programs available to all otherwise qualifying applicants (New York excelsior can keep the state residency requirement but should not be allowed to say it applies only to people who make under $125k a year). I…

I sympathize with the consistency of a "pure universal" approach to policy, but like many purist policy philosophies, I don't think it would survive rigorous implementation.

For so many reasons. Chief among them, maybe, people are generally reluctant to support governments engaged in transfers of resources from themselves to billionaires.

Re: Finland tax authorities matching Bitcoin transactions and bank transfers

#50

Post by acdha »

StavrosK wrote: post #48
acdha wrote: post #39

Earlier quoted context omitted.

They can still require mandatory reporting when real money enters and leaves the system. Everyone is going to need to convert currency into Monero or vice versa and governments routinely require disclosure information at such points.

Yes, for sure. But there can be a secondary market if people accept Monero directly, so you don't have to convert.

Sure - just as cash and barter have allowed for millennia, but there’s an upper bound before that draws attention. Your landlord or supermarket have too much to lose if they help you cheat on your taxes.

With a digital transaction record keeping is less burdensome, too, so it’s more likely that if a substantial number of people started using cryptocurrencies the tax authorities would simply require reporting both sides of the transaction so they could confirm that the other party is reporting accurately as well.

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