A Private person had purchased some Ether crypto currency and intended to sell it.
The transfer of Ether crypto currency is a transfer of a piece of property and, thus, subject to the rules concerning the taxation of capital gains. Supreme Administrative Court of Finland overruled with its decision 2019:42 given on March 29, 2019, the advance ruling given by the Central Board of Taxation based on which the profit was regarded as ordinary capital income, that is as income which is comparable to interest and rental income.
In Finland capital gains and ordinary capital income are both included in the taxable capital income. The total amount of the taxable capital income is subject to 30 % tax rate up to taxable capital income of EUR 30,000 and 34 % tax rate on the excess. In spite of the same tax rate the characterization of the profit accrued based on the transfer of crypto currency as capital gain does have relevance, as there are special rules concerning the calculation of the amount of the capital gain. Based on these rules the taxpayer is entitled to deduct as acquisition cost of the transferred property either the actual acquisition cost or so called presumed acquisition cost (20 % of the purchase price received or 40 % of the purchase price received if the property has been owned at least for more than ten years), which ever is more beneficial to the taxpayer.
The result also means that the profit was not characterized as exchange gain.
KHO 2019:42 (in finnish)
Contactinformation:
Päivi Musakka, Head of Communications of SAC
050 341 1347
[email protected]
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