€30 million in unreported crypto gains discovered by Finnish tax administration in 2023

In 2023, Finland’s Tax agency discovered €30 Million ($31.9 million) in undisclosed profits from crypto trades. Consequently, the country requires all earnings from selling or mining digital assets to be reported.

According to local news source Verkkouutiset, the Finnish Tax Authority is cracking down on unreported tax gains from the previous year. They’ve requested cryptocurrency investors to pay up to ten million euros in capital income tax.

Tax authority’s cryptocurrency crackdown

Mika Siivonen, a tax expert from the Finnish Tax Administration, asserts that the substantial sum discovered last year showcases the effectiveness and efficiency of their control mechanism.

The amount found last year is large in euro terms, which indicates that the control works and is effective

Mika Siivonen

If you haven’t reported your income yet, you must pay your taxes and incur additional charges for late payment. According to the report, not doing so could land you in legal trouble.

The Finnish tax authority has found that in 2022, 9,800 people reported earnings from cryptocurrency. This is a drop from 2021, which saw 16,000 people reporting crypto earnings.

It seems that when the exchange rates of virtual currencies have been low, investors have resorted to selling less of their holdings than before. There could be various reasons for this trend, one of which could be that sales losses have not been declared for taxation purposes.

Siivonen noted that crypto exchanges have shared more details about Finnish customers’ crypto transactions.

Estimates suggest that many individuals earning from cryptocurrencies neglect to report this income for tax purposes. Such information comes to light through several global virtual currency exchanges that share data with the Tax Administration.

The report stated that income generated from using or mining virtual currencies in 2023 should be declared with a pre-filled tax return.

Money made from cryptocurrencies is taxed as investment income, while cryptocurrencies obtained through mining are taxed as regular income. Plus, if you sell your virtual currencies at a loss, you must also report that for tax purposes.

Finland’s crypto mining potential

Finland hasn’t mined as much cryptocurrency as neighboring countries like Norway, Sweden, and Iceland. These countries use their plentiful hydropower resources to attract much of the area’s mining activity.

On the other hand, Finland’s high electricity prices limit its bitcoin mining capacity. With just 40 MW, it only contributes a tiny 0.3% to Bitcoin’s global operations.

That being said, times are changing. While other Nordic countries have hit their limits, Finland has a vast potential just waiting to be utilized.

Though still in its early stages, Finland’s bitcoin mining industry could potentially match Norway’s impressive 300 MW within the next few years. This promising outlook is backed by Finland’s sturdy energy sector, which largely relies on non-fossil fuels, comprising 89% of the total energy composition. 2022 nuclear power took the lead, supplying 35% of Finland’s electricity.

In addition, the new start-up of the Olkiluoto III reactor, Europe’s biggest, raises Finland’s nuclear contributions to 55%. This is second in the world, right behind France.

Unlike many European nations stepping away from nuclear power, Finland is increasing its reliance on it. Thanks to new developments like the Olkiluoto III reactor, the country is set to produce an impressive 12.6 TWh each year.

Finland is not just focusing on nuclear; it is speeding up its progress in wind energy. They plan to increase their capacity on the West Coast by over double by 2028. This ensures an eco-friendly future for energy and makes Finland a lucrative spot for budget-friendly Bitcoin mining.

Finnish bitcoin miners have a significant part in the country’s energy plan. They can connect their operations with Finland’s wide district heating systems. By doing this, they provide waste heat, which helps reduce carbon emissions from heating services and lessens the dependence on imported fuels.

This not only gives miners another source of income but also boosts their reputation, making it harder for authorities to challenge the industry.

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