Crypto Tax Guide Finland: Everything You Need To Know

Are you one of the many crypto investors who seek to understand crypto taxes, or do you feel overwhelmed by the prospect of tax reporting as you plan to enter the world of cryptocurrency?

Luckily, the Finnish Tax Administration, Vero, has released official tax guidance to help you understand how to calculate and report your crypto taxes in Finland. In this article, we will explain how Finland taxes crypto, how much tax you need to pay on your crypto gains, and how to report your crypto taxes to Vero.

It is essential to keep in mind that cryptocurrency taxes can be complex. Therefore, this guide may be lengthy. However, we will do our best to simplify the information so that you can understand everything. We suggest reading the entire guide to avoid overlooking any important details.

So, let’s begin.

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How is Crypto Taxed in Finland?

As per the guidelines issued by Verohallinto (also known as Vero), the Finnish Tax Administration considers cryptocurrencies as personal assets rather than legal tender or fiat currencies such as the euro.

Vero has defined Cryptocurrencies “as a form of digital value that can be used to settle liabilities, electronically transferred, saved, and exchanged, and are not issued by any central bank or public authority.”

In Finland, cryptocurrency purchases and transfers between wallets and exchanges are not taxed. However, profits generated from selling or exchanging cryptocurrencies are subject to Capital Gains Tax and are considered capital income.

If you have received income through mining and staking your income will be subjected to Income Tax instead of Capital Gain Tax. In Finland, there are various other aspects of crypto taxation. Let's understand them in detail.

Capital Gains Tax Finland

According to the Finnish tax regulations, cryptocurrency is considered as a personal asset, making it your responsibility to pay capital gains tax when you dispose of your crypto assets. Therefore, it is essential to report any sales of Bitcoin or other cryptocurrencies as capital gains. If you’re involved in any of these crypto-related transactions you'll probably have to pay taxes:

Trading one cryptocurrency for other cryptocurrencies.
Converting a cryptocurrency into fiat currency such as USD or EUR.
Using cryptocurrency to purchase goods or services.
Trading NFTs.
Participating in cryptocurrency staking.
Earning income from margin/futures trading in cryptocurrency.

Capital Gain Tax Rate Finland

Calculating the capital gain tax rate for cryptocurrency in Finland is straightforward. Much like other investment types that are taxed by Vero, your cryptocurrency gains or losses may be subject to taxation based on your relative position in the tax brackets.

If you derive any capital gain from the above-mentioned activities you’re liable to a 30% tax rate for amounts up to €30,000 and a 34% tax rate for any amount that exceeds this threshold. Therefore, the tax amount you pay on your crypto profits will either be 30% or 34%, depending on the total amount of capital income you earned throughout the tax year.

Crypto Losses

Losses are a common occurrence in any type of activity, whether it involves business or cryptocurrency. Fortunately, there are certain concessions available to you if you have incurred losses through crypto transactions. Under § 50 of the Income Tax Act, you can claim tax deductions for losses resulting from the sale of cryptocurrencies, as long as the total sales price is over €1000.

Moreover, you can offset these losses against any gains you may have made from the sale of other virtual currencies within the tax year and the following five years. But you should keep in mind that losses can only be claimed if you have sold your cryptocurrencies. If the value of your currencies has decreased but you still own them, you cannot claim any losses.

Lost Or Stolen Crypto

If you've had your cryptocurrency stolen, you won't be required to pay taxes on them. The same goes for instances where you've experienced losses due to chain hacks, scams, or lost private keys.

It would be unfortunate if you've had to go through such a situation, but keep all the relevant documentation as proof of evidence for any unknown circumstances.

How to Calculate Capital Gains and Losses?

If you are looking to calculate the gains or losses on your cryptocurrency investments, it will be a 2 step process in any tax jurisdiction that imposes capital gains taxes on the disposal of crypto assets.

Firstly, you need to determine the sales price (also known as proceeds) of the cryptocurrency sold, and then you can determine the purchase price (also known as cost basis).

The sales price refers to the value of the cryptocurrency at the time of the transaction in the currency of the transaction. However, determining the purchase price to calculate capital gains can be tricky. In Finland, the tax authority has established guidelines that allow you to determine the purchase price by using accounting methods like First-in First-out (FIFO) or Last-in First-out (LIFO).

FIFO Accounting- Under FIFO accounting, the first asset you bought is considered the first asset you sell
LIFO Accounting- Whereas under LIFO accounting, the last asset you purchased is considered the first one you sell.

In addition, if there are any trading or brokerage fees associated with the transaction you can add them to the cost basis, which means that trading fees are fully deductible against profits.

Lastly, you can calculate your capital gains with the general formula - Capital Gains = Selling Price - Purchase Price.

Deemed Acquisition Cost Method Finland

Sometimes it may be difficult for you to determine the original purchase price of your cryptocurrency due to reasons like - losing access to your trading history. You can tackle this situation with the Finnish Tax Administration's exclusive method called the Deemed Acquisition Cost Method. This method allows you to deduct a fixed percentage of the sales price instead of the purchase price.

The process is simple! Understand this - suppose you have held crypto for less than 10 years, the deemed acquisition cost will be 20% of the selling price. And if you have held your crypto for more than 10 years, the deemed acquisition cost will be 40% of the selling price.

The deemed acquisition cost method can be particularly useful for smaller cryptocurrencies where pricing information is not easily accessible. But you may need to provide evidence that you are unable to access your original transaction history if you choose to use this method while reporting your crypto taxes.

Income Tax

If you receive cryptocurrency as payment for your services or work, you are subject to paying standard income taxes, similar to if you were paid in your local currency. This also applies to any profits gained from mining cryptocurrency, where the value of the cryptocurrency at the time of access should be disclosed to tax authorities.

Here are a few activities that are considered taxable income in Finland and therefore should be reported accordingly.

Mining
Income received from stacking
Income (e.g., freelancing, salary, rewards, online gaming)
Create & Sell NFT

Income Tax Rate Finland

Finland has a progressive tax system similar to its neighbouring Nordic countries. This means that the tax rate increases as the total taxable income increases. The income tax rate can fall into three categories in Finland:

National Taxes
Municipal Taxes
Church Taxes.

National taxes come with a tax-free allowance of €19,000 for the 2022 tax year, with tax rates ranging from 12% to 44% above this threshold, depending on your total income. You can understand the national tax rates with the table below.

In contrast, municipal taxes are applied at a flat rate and set by individual municipalities, with tax rates ranging from 16.5% to 23.5%.

Finally, there's the church tax that applies to all members of the Evangelic Lutheran, Orthodox, or Finnish German church. The church tax is also levied at a flat tax rate, varying between 1.0% and 2.1%, depending on where you live in Finland.

Tax-Free Crypto Transactions

Not all crypto transactions attract tax liabilities, here are some crypto transactions that are considered tax-free by Vero.

Buying crypto with fiat currency
Moving crypto between personal wallets
Crypto received as a gift
Lost or stolen crypto
Donating any crypto without seeking profits
Crypto Forking

Taxed Crypto Transactions

If you’re engaging in any of the following activities during the tax year, you may result in potential tax liabilities to Vero:

Selling cryptocurrency for fiat currency
Trading one cryptocurrency for another
Using cryptocurrency to purchase goods or services
Earning cryptocurrency as income
Borrowing or lending crypto
Receiving cryptocurrency through mining or staking activities
Receiving cryptocurrency as a gift (subject to gift tax rules)
Creating or Selling NFTs

When to Report Crypto Taxes in Finland?

You may be wondering about the deadline for filing taxes in Finland. While Vero has not yet released specific dates, the past trend suggests the deadline could be April 1st, May 10th, May 17th, or May 24th (any of these dates).

So, hang tight as the deadline approaches, and the official date may be announced by the end of March or April.

How to File Crypto Taxes in Finland?

When you’re done with your capital gain calculation you can start filing the taxes to Vero. You can file your crypto taxes online or offline mode in Finland. However, in this guide, we’ll mainly focus on the online mode for filing taxes. So, stick to these steps to make sure everything goes smoothly and you don’t end up with tax problems at the end of it:

Log in to the MyTax platform.
Navigate to the “Individual income tax” section and select the year you want to report your crypto taxes for (e.g. the Tax year 2021).
Select "Check pre-completed tax return".
Click "Correct" on the new page that appears.
Navigate to the "Other income" section and select "Yes" in the box for "Capital gains".
Click "Add new transfer" and select "Virtual currencies".
Enter details for all the capital gains transactions you made in 2021 or enter the total sales price and acquisition cost of all cryptocurrencies sold during the year.
Enter any expenses directly related to your purchases or sales in the appropriate fields.
In the "Property acquisition costs" field, you can input expenses that are directly linked to your purchases. Likewise, in the "Selling costs" field, enter any expenses related to your sales as required.
Click on the "Add file" button located at the end of the capital gain calculation, then choose "Attachment" and specify that it pertains to virtual currencies. If you have manually calculated your crypto taxes, you can select your PDF file, and your filing is completed.

Note: For transactions with both gains and losses, use separate fillable fields in MyTax for each calculation - one for gains and one for losses.

Additionally, to report mining, staking, NFT, and airdrop income, go to the "Other income" section of MyTax. Additionally, you can input your mining expenses by selecting Deductions > Expenses for the production of income > Expenses for the production of other income than wage income.

Although these steps may seem overwhelming, there's no need to fret. You can opt for an online crypto tax platform such as Kryptos that can assist you throughout the process. This platform can provide you with step-by-step guidance, aid you in locating deductions and credits, and even file your tax return directly with Vero.

Tax On Mining Crypto Finland

If you’ve earned income from crypto mining, you have to pay earned income tax. You must report the value of your mining income in euros at the time you gain access to your mined cryptocurrency.

To calculate your income from mining, you can use the average exchange rate for the period you are reporting, whether it be daily or monthly. Also, you have to remain consistent with your chosen period throughout the year.

Some of the deductibles on mining are as follows:

Expenses that you incur while mining can be deducted from your income (only the portion that is directly related to mining)
Any energy used for the computer or device that is not directly involved in mining cannot be tax-deductible
The purchase price of mining equipment is deductible
If the equipment is used for personal use occasionally, you can still deduct some expenses based on the frequency of personal use.

This table will help you understand the deduction based on occasional personal use of equipment.

Lastly, if you can use the hardware for mining for more than three years, you should deduct expenses according to a series of depreciation expenses of no more than 25% per year.

Crypto Margin Trading, Futures, CFDs

For individual investors involved in margin trading, crypto futures, and CFDs, the tax treatment may be subject to securities and derivatives regulations, as outlined by the guidelines provided by Vero.

When engaging in margin trading, funds are borrowed to take leveraged positions, and any resulting profit or loss from trades, after accounting for margin fees, is classified as realized. It's important to note that any realized profit from margin trading is subject to capital income tax. However, any losses made on the transfer of property can be deducted from gains made during the tax year and for up to five years following the tax year.

NFT Taxes Finland

In Finland, you are liable to pay taxes if you are involved in any of these activities:

Create or Sell NFTs
Resell NFTs

So, we will understand both of these situations appropriately.

If you are the creator or artist of the NFT, any income earned from its sale or commissions on subsequent sales is considered earned income and is subject to taxation. The realized income is based on the value of the received cryptocurrency in euros at the time of the sale and you’ll liable for income tax in Finland.

However, as the artist, you may deduct expenses incurred while making the art, such as NFT marketplace fees and drawing software expenses. These expenses are reported under the same section as mining expenses: "Expenses for the production of other income than wage income."

The resale of NFTs is treated similarly to trading cryptocurrency. Any gains from the resale of an NFT should be reported and are subject to capital gain tax.

You can refer to the complete NFT tax guide here.

Defi Taxes Finland

Vero is yet to provide definitive guidelines on how De-Fi transactions will be classified for tax purposes. With De-Fi being a nascent and constantly evolving field, offering novel ways of earning income worldwide, it is not possible to include all De-Fi transactions and returns within a standardized set of tax regulations.

Keep in mind that engaging in De-Fi transactions that result in an income or capital gain could potentially trigger tax obligations. The following are some De-Fi transactions that may incur tax liabilities as determined by Vero:

Receiving liquidity tokens or new tokens as rewards from De-Fi protocols.
Using collateral to obtain a loan from De-Fi protocols or private lenders.
Participating in staking, yield farming, and adding or removing liquidity from liquidity pools.
Realizing profits from margin trading activities within De-Fi protocols.

Can the Vero Track Crypto?

At present, we lack information on this subject. Nevertheless, if you were contemplating the possibility of omitting certain transactions to reduce your tax liability, we strongly recommend abandoning that strategy and disclosing all of your crypto transactions to Vero. If you’re an individual engaged in cryptocurrency transactions in Finland, you might have undergone a Know-Your-Customer (KYC) verification process while signing up for an exchange. Therefore, it is likely that Vero possesses a record of their activities, and they easily track your crypto transactions.

What Crypto Records will the Vero want?

If you’re filing tax returns to Vero you have to maintain sufficient documentation to substantiate the claims made on their tax returns. You should maintain records of all cryptocurrency transactions to fulfil this obligation.

Transaction date
Crypto involved in the transaction
Type of transaction
Quantity of cryptocurrency bought, sold, or exchanged
Euro value of the cryptocurrency at the time of the transaction
Records from exchanges and any other pertinent documents
Wallet addresses for which you possess the private keys.

How are Airdrops and Forks Taxed in Finland?

Vero does not provide any explicit guidance on the taxation of airdrops. However, since airdrops share similar characteristics with staking rewards, we share the opinion that it is appropriate to treat airdrops as capital income rather than earned income for tax reporting purposes.

Once Vero releases updated guidance on the tax treatment of airdrops, we will incorporate this information into our guide and provide further clarification.

If you have received crypto from a hard fork, you are not liable for tax at the time of receipt. Nevertheless, selling the received cryptocurrency may attract a capital gain tax. In this case, you can assume the cost of acquiring the newly received cryptocurrency is €0. This implies that you have to pay tax on the total market value of the cryptocurrency at the time of sale.

Frequently Asked Questions (FAQ)

Is crypto legal in Finland?

Yes, crypto is legal in Finland and is considered a "personal asset" rather than a currency by the Finnish Taxation Authority, Vero. As such, cryptocurrency is subject to taxation following specific guidelines issued by Vero, which include different tax rules and regulations.

2. Do you pay tax on crypto in Finland?

As per the tax laws in Finland, cryptocurrency is classified as property, and any profits or losses incurred through buying, selling, or trading crypto are subject to capital gains tax. The rate of tax is variable and determined by several factors, including the amount of gain realized and the individual's income tax bracket.

Moreover, it is necessary to report crypto tax annually, and always seek advice from a tax professional or accountant to understand your particular tax liabilities regarding cryptocurrency. They can provide you with guidance on the specific requirements and help you file your crypto taxes accurately and on time.

3. How is staking taxed in Finland?

As per the tax regulations, mining rewards are categorized as earned income, whereas staking rewards earned by locking up existing cryptocurrency holdings are classified as capital income. This classification means that staking rewards are liable for Capital Gains Tax, not Income Tax.

4. Is crypto as a gift attract tax in Finland?

If you receive cryptocurrency as a gift and you’ve decided to sell it within one year, the acquisition value of the donor will be transferred to you. As a result, you would be required to pay taxes on the difference between the selling price and the acquisition value.

Furthermore, if the cumulative value of gifts received from the same donor exceeds €5000 over three years, you are liable to pay gift tax according to the Vero gift tax guidelines.