Taxation of cryptocurrencies in Finland

Instructions for reporting taxes on virtual currencies in Coinmotion.

Disclaimer!

The information presented in this guide does not constitute tax, accounting, or financial advice. Coinmotion is not responsible for the accuracy of the information provided in this article. Always follow the latest guidance from the tax authorities when reporting your income from virtual currencies.

Please note that Coinmotion does not file tax returns on behalf of customers. Each customer is responsible for reporting their own profits and losses and paying taxes according to tax instructions.

You can find the Finnish Tax Administration's instructions for reporting income from cryptocurrencies here.

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Making a self-declaration of virtual currency taxes can be a laborious task, especially if you have conducted a large number of transactions. To facilitate the creation of reports, we have launched a new partnership with Divly. As a Coinmotion customer, you are entitled to a 20% discount on all tax reports produced through Divly.

This is how you use Divly for preparing tax reports..

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1 General information about the taxation of virtual currencies

Income from virtual currencies is taxable income in Finland. The profit or loss from virtual currencies is calculated by subtracting the purchase price, sale price, and expenses related to acquisition, storage, and sale from the currency's purchase price.

Income from virtual currencies is taxable in Finland and losses are also mostly deductible. Capital gains and losses from virtual currencies are calculated by subtracting the purchase price of the currency from its selling price, as well as the costs related to its acquisition, storage, and sale. In Omavero, the losses and gains from the disposal of virtual currencies during the year are reported separately.

Example 1: Tax consequences of buying and selling a single bitcoin

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1.1 Tax rate for virtual currencies

Income from virtual currencies is generally taxed as capital gains. An exception is mining, from which the income received is usually classified as earned income (tax authority's guidelines on the taxation of mining income). Capital gains are generated when selling or exchanging property whose value at the time of sale is greater than its original purchase price.

In Finland, the capital gains tax rate is 30% up to €30,000. Any capital gains exceeding this amount are subject to a 34% tax.

It is also important to note that capital gains are not taxable income if the total sales price of the assets sold during the tax year is less than €1,000. For example, if you sell virtual currencies worth €1,000 during the year and have not sold any other property, the profit from the virtual currencies is tax-free. However, this also means that any losses from these virtual currencies cannot be deducted for tax purposes. The sold virtual currencies must still be reported on the tax return, even if no taxable income has been generated.

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1.2 Determining taxable income

Directly selling virtual currencies for euros is not the only transaction in which their value is realized for tax purposes. Using virtual currencies in any situation is, in principle, a taxable event.

According to the Finnish tax authorities, taxable income from virtual currencies is generally generated in four different situations:

1. Converting virtual currencies into euros or other official currencies
2. Exchanging virtual currencies for other virtual currencies
3. Using virtual currencies to pay bills
4. Using virtual currencies to purchase goods or services

Therefore, for example, exchanging virtual currencies into euros on Coinmotion triggers a taxable event, even if the euros are not transferred from Coinmotion to the customer's own bank account for use.

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1.3 Other transactions related to virtual currencies

In addition to this, virtual currencies obtained from activities such as mining, staking, or lending virtual currencies are taxed. Always check the tax authority's latest instructions when submitting your tax return.

Examples of virtual currency transactions that are not taxed include buying virtual currencies with euros or transferring virtual currencies between the owner's own crypto wallets or platforms such as Coinmotion. For example, the transfer of virtual currencies from Coinmotion to an external crypto wallet is not a taxable event in itself if the transferred currencies are not exchanged for other currencies.

There is no separate tax authority decision regarding the taxability of all possible transactions involving virtual currencies. This is why correctly assessing the tax treatment of complex virtual currency transactions can often be difficult.

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1.4 FIFO method

The purchase cost of virtual currencies is determined using the FIFO (First-In-First-Out) method unless the taxpayer indicates otherwise. This means that when selling virtual currencies, the purchase price is determined as the price of the first purchased virtual currency. However, when reporting income from virtual currencies in the Omavero system, the program automatically chooses the more favorable option between FIFO and the cost basis assumption.

 

Example 2: Calculating capital gains using the FIFO method

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1.4 Deemed acquisition cost

As an alternative to the FIFO method, the capital gain from virtual currencies can also be determined using the deemed acquisition cost. When using the deemed acquisition cost, the purchase cost of the virtual currency is not deducted from the sale price, but the deemed acquisition cost is used instead.

When using the deemed acquisition cost, for example, trading fees cannot be deducted from the sale price of the virtual currency.

The deemed acquisition cost for virtual currencies owned for less than 10 years is 20% of the sale price.

The deemed acquisition cost for virtual currencies owned for more than 10 years is 40% of the sale price.

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2 Reporting transactions in Coinmotion

There are two different reports available in Coinmotion for reviewing your account: a transaction report and a balance report.

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2.1 Downloading account transaction history from Coinmotion

You can calculate your profits or losses from Coinmotion by downloading the transaction report from your account. You can download the report on your computer by clicking on your email address in the top right corner of your account and navigating to "Reporting" → "Download transaction statement" from the drop-down menu.

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2.2 Interpreting the transaction report

The transaction report is an xls or csv file that can be easily viewed with spreadsheet software such as MS Excel or Google Sheets. For example, you can download the transaction report to Google Drive and open it with Google Sheets.

The report contains all transactions related to your Coinmotion account, including buy, sell, and exchange orders, cryptocurrency and euro transfers, and other account activities. Additionally, you can find exchange rates, paid fees, and transaction-time balance information in the report.

Using the transaction report, you can calculate your capital gain by subtracting the purchase price and expenses from the sale price of the virtual currency.

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Example 3: Viewing the transaction report

Explanation for transaction report headers:

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2.3 Downloading account balance report from Coinmotion

You can also download a balance report from Coinmotion, which shows the closing balance of your Coinmotion account for a specific day.

You can download a balance report by accessing Coinmotion on your computer.

1. Log in and click on your email address in the upper right corner of your account.
2. Go to the Reporting page.
3. Choose the date for the balance report.
4. Click on Generate Report.

You can generate a balance report for any specific day, and it will display the closing balance for that day.