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Author Topic: Re: Finnish tax authority releases instruction on taxation of virtual currencies  (Read 7156 times)
rebuilder
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September 27, 2013, 10:01:22 AM
Last edit: September 28, 2013, 07:48:31 PM by rebuilder
 #1

Something went wrong with this post! Let's try again:

Edit: I should note I'm not a lawyer or in any way familiar with Finnish tax codes. I write this as a layman, my translations may be inaccurate, and I may have misinterpreted some things. Caveat lector.

http://vero.fi/fi-FI/Syventavat_veroohjeet/Verohallinnon_ohjeet/Virtuaalivaluuttojen_tuloverotus

In Finnish, I don't have time to translate fully or go into a deeper summary. They use BTC as an example, but say the same rules apply to other currencies as well. I'll use the same device here.

At a glance, some of the more interesting points:

-Virtual currencies are not "real, official currency", nor are they securities or bonds in the sense meant by the law. They are, however, legal to use, and are treated as "an other, unspecified type of agreement between users".

-Fiat-denominated gains are taxable as capital gains. This applies when selling bitcoins for fiat at a profit as compared to when one bought the BTC, as well as to using bitcoins to buy goods or services directly. In both cases, the value of the BTC spent is calculated at the time of spending, and the cost of acquiring them is determined by when they were bought, first in, first out.

-Losses from investing in BTC are *not* tax-deductible. BTC trading is said to be similar to trading in CFDs, for which there is a precedent from the Finnish Supreme Court, with this conclusion.

-Profits from mining are treated as income gains, realized at the moment the miner gains control of the BTC, and calculated at the exchange rate at that time. (No kidding. Good luck with that!)

-Profits from gambling and games (sale of in-game items, for example) are taxable as income, valued at the exchange rate at the time the BTC gained is traded for fiat. Losses are, again, not deductible, but are treated as costs incurred in hobby activities.

-When receiving Bitcoins as payment, as a business, such income is taxable at the exchange rate at the time of the transaction. Here they give some definition of how value is determined: The value is converted to Finnish currency (EUR at the moment...) at the daily rate, if such is available, otherwise the value agreed upon by the parties of the transaction is used. Intrestingly, here, it seems losses from selling BTC *are* tax-deductible.

-At the end there appears to be a concession to professional Bitcoin trading, where the taxation of such can be treated more like taxation of securities trading,  with a cursory list of requirements, but I'm afraid I don't quite grasp what the implications are. Maybe someone familiar with Finnish tax law on investing can clarify?

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lonelyminer (Peter Šurda)
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September 28, 2013, 07:17:50 AM
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Does it say anything about VAT? This is still unclear in many EU countries.
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September 28, 2013, 07:48:18 PM
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No mention of VAT. It's my interpretation Bitcoin is not considered a digital good subject to VAT here.

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October 02, 2013, 06:52:47 PM
 #4

Something went wrong with this post! Let's try again:

Edit: I should note I'm not a lawyer or in any way familiar with Finnish tax codes. I write this as a layman, my translations may be inaccurate, and I may have misinterpreted some things. Caveat lector.

http://vero.fi/fi-FI/Syventavat_veroohjeet/Verohallinnon_ohjeet/Virtuaalivaluuttojen_tuloverotus

In Finnish, I don't have time to translate fully or go into a deeper summary. They use BTC as an example, but say the same rules apply to other currencies as well. I'll use the same device here.

At a glance, some of the more interesting points:

-Virtual currencies are not "real, official currency", nor are they securities or bonds in the sense meant by the law. They are, however, legal to use, and are treated as "an other, unspecified type of agreement between users".

-Fiat-denominated gains are taxable as capital gains. This applies when selling bitcoins for fiat at a profit as compared to when one bought the BTC, as well as to using bitcoins to buy goods or services directly. In both cases, the value of the BTC spent is calculated at the time of spending, and the cost of acquiring them is determined by when they were bought, first in, first out.

-Losses from investing in BTC are *not* tax-deductible. BTC trading is said to be similar to trading in CFDs, for which there is a precedent from the Finnish Supreme Court, with this conclusion.

-Profits from mining are treated as income gains, realized at the moment the miner gains control of the BTC, and calculated at the exchange rate at that time. (No kidding. Good luck with that!)

-Profits from gambling and games (sale of in-game items, for example) are taxable as income, valued at the exchange rate at the time the BTC gained is traded for fiat. Losses are, again, not deductible, but are treated as costs incurred in hobby activities.

-When receiving Bitcoins as payment, as a business, such income is taxable at the exchange rate at the time of the transaction. Here they give some definition of how value is determined: The value is converted to Finnish currency (EUR at the moment...) at the daily rate, if such is available, otherwise the value agreed upon by the parties of the transaction is used. Intrestingly, here, it seems losses from selling BTC *are* tax-deductible.

-At the end there appears to be a concession to professional Bitcoin trading, where the taxation of such can be treated more like taxation of securities trading,  with a cursory list of requirements, but I'm afraid I don't quite grasp what the implications are. Maybe someone familiar with Finnish tax law on investing can clarify?


As usual finnish government (tax authority) does not have any idea about what they are doing. They can write up bunch of crap that does not work in real life - just like these 'instructions'. I suggest showing just middle finger for their rubbish.  
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