Finland Crypto Tax Guide 2023

Unlock the secrets of crypto taxation in Finland: Your ultimate guide for 2023 revealed. Discover the lowdown on crypto capital gains, losses, income, tax calculations, and reporting to Vero. It's all here in our fact checked guide. Let's go!

Do you have to pay tax on crypto in Finland?

Yes. Vero - the Finnish Tax Administration, is clear that crypto is subject to tax. You’ll pay tax on capital gains from disposing of crypto by selling, trading, or spending it, as well as Income Tax on earned income from activities such as crypto mining.

How much tax do you pay on crypto in Finland?

The amount of tax you’ll pay depends on your transaction and how much you earn. For capital gains, you’ll pay 30% Capital Gains Tax on crypto gains over €1,000 - provided your total capital gains are less than €30,000. If your capital gains are over €30,000, you’ll pay 34%. As for earned income from crypto, you’ll pay Income Tax at up to 44% depending on your municipality and how much you earn.

Can Vero track crypto?

Yes, Vero may be able to track your crypto transactions and holdings.

Despite a reputation for anonymity, as crypto has moved closer to the mainstream, governments and tax authorities have started paying attention and regulating crypto exchanges as financial service providers.

In particular, as part of the European Union’s Sixth Anti-Money Laundering Directive, every company that provides financial services to cryptocurrency customers and businesses has to comply with much tougher regulations around customer identification. 

This customer data is made available between all EU member states, including Finland.

As well as this, there is a new EU directive proposal on data sharing, known as Dac8, which may take effect soon. Under the proposed directive - it's possible that Vero will have the ability to check whether someone owns crypto, as well as have the authority to look into crypto companies' accounts and gain insight into crypto assets. 

And for those tempted to just outright avoid their crypto taxes - don’t. You'll face penalties, interest on any tax due, and even potentially jail time for severe tax evasion, with sentences ranging from four months to four years.

Is any crypto tax free in Finland?

Let’s start with the good news, you won’t always have to pay tax on your crypto transactions in Finland. Certain transactions are tax free, including:

• Buying crypto with EUR or another fiat currency
• Holding crypto
• Transferring crypto between your own wallets
• Gifts of crypto under €5,000
• Coins received as a result of a hard fork

How is crypto taxed in Finland?

Vero considers crypto as a virtual currency and has provided extensive guidance on the tax implications of various crypto transactions.

In summary, the tax you’ll pay depends on your transaction, but crypto is generally subject to Capital Gains Tax or Income Tax, as well as Gift Tax in specific circumstances. We’ll look at both in detail.

Crypto gains

Vero is clear that income received from exchanging crypto is seen as capital income and taxed as a capital gain. Exchanges of crypto according to Vero, include:

• Selling crypto for EUR or another fiat currency
• Trading crypto for crypto
• Spending crypto on goods or services
• Staking rewards at the point you gain possession of the rewards

So if you sold, swapped, or spent crypto and made a gain, ​​or received staking rewards - you’ll pay Capital Gains Tax. But there are some specific rules regarding how much and when you’ll need to pay.

Capital Gains Tax Rate Finland

First of all, every taxpayer in Finland receives a €1,000 allowance on capital gains. That means if your gains (from all assets, not just crypto) are less than €1,000, you don’t need to pay Capital Gains Tax on them.

If you have more than €1,000 - you’ll pay either 30% or 34% tax depending on how much capital income you have.

Crypto losses

Not every investment ends with a gain, and if you have a loss, it is considered a capital loss. While nobody likes a bad investment, they are actually good news for your tax bill.

Under Section 50 of the Income Tax Act, you can deduct capital losses from crypto, as long as the total gain is more than €1,000, meaning you can offset your losses against your gains to reduce your overall tax liability.

If you have more capital losses from crypto than gains, you may offset these losses against other types of capital income - for example, from shares.

If you still have more capital losses from crypto with no capital income to offset them against, you may carry forward your losses for up to 5 years to offset against any capital income in that period.

Lost and stolen crypto

Vero has not released guidance on the tax implications of lost or stolen crypto, whether that’s due to a hack, loss of private keys, or a collapsed exchange.

This said, Vero is quite explicit in their guidance that losses are only considered capital losses when crypto is sold or otherwise disposed of. As such, they may not allow losses due to theft or negligence as deductible capital losses.

You should contact Vero or an experienced crypto accountant in Finland for more information.

How to calculate crypto gains and losses

To report your crypto gains and losses to Vero, you need to know how to calculate them.

This starts with knowing your cost basis.

Your cost basis is whatever your crypto costs to acquire, plus any allowable fees, for example, purchase or sale fees.

Once you know your cost basis, simply subtract this from your sale price to calculate your capital gain or loss. If you otherwise exchanged your crypto, for example, by selling or spending it, use the fair market value of the crypto in EUR on the day you disposed of it as your sale price instead.

Crypto cost basis method Finland

So you know the basics, but what about when you’re dealing with multiple coins or tokens of the same kind?

For example, if you owned 5 ETH, and you’d acquired these at different prices on different dates, and you later sold 1 ETH. How do you know which cost basis to use to calculate your gain or loss? It can have a significant impact on your tax bill.

This is where a cost basis method comes in and Vero is very clear that only the FIFO accounting method is allowed.

The First In, First Out cost basis method is pretty straightforward, it assumes that the first crypto you bought is the first crypto you sell. So you’ll always use the cost basis for the crypto you acquired first for your capital gain or loss calculations.

Deemed acquisition cost method

Vero has specific guidance for investors who cannot determine their cost basis - and it’s known as the deemed acquisition cost method.

This method says investors who cannot determine their original acquisition cost may deduct a fixed percentage of the sale price instead of the purchase price. For crypto held less than 10 years, the deemed acquisition cost is 20% of the sale price. For crypto held more than 10 years, the deemed acquisition cost is 40% of the sale price.

It’s important to note that you must be able to prove, with evidence, that you’re unable to access your original transaction history in order to use the deemed acquisition cost method.

Crypto Income Tax

With capital income out the way, let’s take a look at when crypto may be subject to Income Tax.

Vero is clear that there are several instances where crypto is viewed as earned income and subject to Income Tax, including:

• Mining rewards
• Play to earn rewards once exchanged from in-game currency
• Creating and selling NFTs
• Being paid in crypto by your employer or in return for a service

If you have any of these transactions, they’ll likely be viewed as earned income and you’ll pay Income Tax on them. The amount of tax you’ll pay depends on how much you earn.

Income Tax Rate Finland

Finland's Income Tax is a progressive tax system that's made up of three different taxes:

• National Income Tax
• Municipal Income Tax
• Church Tax

You can see the National Income Tax rates for Finland below.

As for municipal taxes - your rate will vary between 4.36% to 10.86% depending on where you live, but the average rate is around 7.40%.

Finally, there’s Church Tax. This is payable by members of the Evangelic Lutheran, Orthodox, and Finnish German churches in Finland on income determined for municipal taxation at a flat rate between 1% to 2.10% depending on the parish.

If you’d like help figuring out what your tax rates will be, Vero has an Income Tax calculator that can help based on your specific circumstances.

How to calculate crypto income

It’s easy to calculate crypto income, although time-consuming if you have regular income from crypto. You’ll need to take the fair market value of your income in EUR, also known as the exchange rate. For mining income in particular, Vero says you may either take the daily or monthly average exchange rate, provided you use this method consistently throughout the financial year.

Tax free crypto transactions

Want to know more about when you won’t pay tax on your crypto? 

Taxed transactions

Now let's take a look at the transactions you'll pay tax on, and the tax you'll pay.

When to report crypto taxes in Finland

The Finnish financial year runs the same as the calendar year, so from January 1st to December 31st each year. This is the period you’ll be reporting on in your tax return.

The deadline for your tax return changes slightly each year depending on when you receive your pre-filled tax return. Generally, you’ll receive your tax return by April of the following financial year, and the due date for your return is mid-may. You can see the full list of dates on the Vero calendar.

How to file crypto taxes in Finland

Once you’ve calculated your capital gains, losses, and earned income, you can report your crypto to Vero using the myTax platform. Here’s how to report your gains and losses:

1. Log in to MyTax
2. Go to the individual income tax section and select the year
3. Select check pre-completed tax return
4. Go to other income and select yes, next to capital gains
5. Select add new transfer and then virtual currencies
6. Enter the details of your transactions for the relevant financial year or enter the total prices price and acquisition cost for all your crypto exchanged during the year (if you’re doing the latter, use 31 December as your sale date and you’ll also need to do two transactions, one for all your total gain and one for your total loss)
7. Add any relevant, allowable expenses related to your purchases in the relevant fields
8. Select add file, then attachment, then specify that your attachment relates to your crypto transactions - you can then upload a Koinly tax report

You’ll also report any earned income in the other income section of my tax, and you can add any mining expenses in deductions, under expenses for the production of income other than wage income.

How to calculate and file your crypto taxes with Koinly

Koinly saves you hours by calculating your crypto taxes obligations for you. Here's how easy it is:

1. Sign up for a free Koinly account.
2. Select your base country (Finland), currency (EUR), and cost basis method (FIFO).
3. Connect Koinly to your wallets and exchanges. Koinly integrates with Binance, Coinbase, Kraken, and hundreds more. (See all)
4. Let Koinly crunch the numbers. Make a coffee.
5. Ta-da! Your data is collected and your crypto tax reports are generated! 
6. To download your crypto tax report, upgrade to a paid plan from €39 per year.
7. Send your report to your accountant, or complete your tax return yourself using the figures from your Koinly report.

What records does Vero need?

Vero is clear that investors should keep records relating to crypto transactions for a minimum of six years including:

• Acquisition costs
• Dates of transactions
• Receipts of transactions
• EUR value at the time of transactions
• Crypto involved in the transaction including the amount purchased, sold, or exchanged
• Wallet addresses

Koinly can help you keep excellent records should Vero ever require more information from you.

The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser or registered tax agent. You should consider seeking independent legal, financial, taxation, or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.