E-commerce, alternative electronic payment instruments and platforms, virtual currencies and the sharing economy and its variations present challenges in combating the shadow economy. Accounting data and other documentation can be stored in various cloud services. Business can be conducted in Finland from abroad, without fulfilling the proper obligations here.
Virtual currencies are defined as mediums of exchange and, in practice, many of them are accepted as payment instruments. They carry an asset value based on supply and demand, and they are mostly used in legitimate activities.
The value of a virtual currency possibly increases when it is exchanged for any official currency, it is used to purchase products or services, or it is exchanged for another virtual currency, in which case capital tax on the increase in value must be paid in euro.
Read more about virtual currencies as a phenomenon.
<div class="attention-block">
<ul>
<li class="attention-block__content">T<strong>ake care of your obligations.</strong> Income received from virtual currencies is taxed as capital or earned income, and you can report it in MyTax. If you sell virtual currencies, such as Bitcoins, report any income received from a possible increase in value under “Other capital income”. Report income received from mining under “Other earned income”. The value of a virtual currency is its exchange rate at the time when it is spent or mined.</li>
<li class="attention-block__content"><strong>Do not delay.</strong> Avoid laborious clarifications and unfortunate consequences later on by reporting the information required on a tax return on time. The Finnish Tax Administration monitors and supervises information reported about virtual currency transactions. While the shadow economy may be involved in such new phenomena, in many cases tax payer does not know what they need to report. The Finnish Tax Administration targets intensified tax control at parties whose reporting is found to be incomplete. The Finnish Tax Administration uses available comparison data in tax control.</li>
<li class="attention-block__content"><strong>Store your acquisition and sales documents</strong> related to virtual currencies. The Tax Administration may ask you to provide the documents at a later stage. Documents must be kept for six years after the end of the tax year.</li>
<li class="attention-block__content"><strong>Monitor the development of legislation</strong> on virtual currencies.</li>
</ul>
</div>
<p>A digital currency based on cryptography (secure information and communication techniques) is called a virtual currency. Virtual currencies and cryptocurrencies can be considered forms of assets as long as they have well-functioning markets. They are often referred to as virtual assets or cryptoassets.</p>
<p>The anti-money laundering directive defines virtual currencies. What they have in common is that:</p>
<p><img src="/link/2279d84583b64c54a00247b48c776df2.aspx" alt="they are not issued or guaranteed by a central bank or the authorities; they may not be linked to a currency confirmed as a legal payment instrument; they do not have the same legal position as currencies or money; individuals and companies accept them as mediums of exchange; and they can be transferred, stored and sold in electronic format." width="800" height="158" /></p>
<p>The Finnish Financial Supervisory Authority (FIN-FSA) and the European Banking Authority (EBA) warn about virtual currency risks:</p>
<div class="attention-block">
<ul>
<li class="attention-block__content">The value determination of virtual currencies has no solid footing, as it is based on supply and demand.</li>
<li class="attention-block__content">No-one pays any profit on virtual currencies. The expected profit is simply based on expectations of someone buying the same item later at a higher price.</li>
<li class="attention-block__content">The value of a virtual currency can fluctuate rapidly and even decrease to zero.</li>
<li class="attention-block__content">Consumers may lose their money in exchange services.</li>
<li class="attention-block__content">Money can be stolen from digital wallets.</li>
<li class="attention-block__content">Consumers do not have the same protection as in the case of funds transferred from a regular bank or other payment accounts when they use virtual currencies as payment instruments.</li>
<li class="attention-block__content">Some virtual currencies may have been created for fraudulent purposes.</li>
</ul>
</div>
Act correctly to combat the shadow economy and financial crime
