Finland - Crypto penetration

intro

Finland has had a clear crypto regulation framework for a long time. It’s famous for the crypto exchange platform Local Bitcoins, which is headquartered in the country.

Security level

Finland has a minor danger security level according to our rating. The jurisdiction has 73.5 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 1,6 per 100,000 inhabitants a year. Story of firearm-related death (3) 2.41 per 100,000 inhabitants a year.

Crypto Payments

According to the VERO guide (4), it’s legally allowed to provide crypto payments in Finland. VERO is the Finnish Tax Authority.

Some businesses accept virtual currency as a means of payment. From the perspective of taxation, using virtual currency to pay for goods or services constitutes an exchange transaction based on a mutual agreement. As noted above, this is a situation where taxpayers use their units of virtual currency, and it causes a tax calculation to be made in order to determine the exact capital-gain or capital-loss amount.

Crypto Salaries

We need data about crypto salaries/wages status in the country. But, since individuals can get virtual currencies as payment for goods and services, this means that at least it’s possible to pay freelancers and provide additional rewards to employers in crypto.

Legal

According to Coinpanda (5), The Finnish Tax Administration (VERO) considered crypto as “a type of personal asset that can be traded freely on the open market”. The official definition from VERO is that cryptocurrencies are a form of digital value (6) that:

Can be used by a person to settle a liability

1. No central bank or other public authority has been the issuer, and which is not considered legal tender for payment purposes.

According to Hannesnellman's overview (7), FIN-FSA licenses crypto entities in the country based on federal law implemented in 2019. Licenses include exchange services (crypto to crypto & crypto to fiat), custodian wallets, and token sales. AML legislation is based on the Act on Bank and Payment Account Monitoring System (571/2019).

Private blockchain networks and entities that provide crypto services occasionally don’t need any license.

Quote

The Finnish Financial Supervisory Authority (the FIN-FSA) acts as the registration authority and supervisory authority for crypto-assets and related services under the Finnish Act on Virtual Currency Providers (572/2019) (Laki virtuaalivaluutan tarjoajista).” It also regulates payment services under the Act on Payment Institutions (297/2010) and asset managers by the Act on Investment Services (747/2012).

The Finnish Virtual Currency Act regulates the provision of "virtual currency services" in Finland. Under the Virtual Currency Act, "virtual currency services" are defined as: • the issue of virtual currency, • the provision of virtual currency exchange services; and • the provision of custodian wallet services. Anyone who offers any of the above virtual currency services in Finland must register with the FIN-FSA.

Companies licensed by FIN-FSA include Northcrypto (8) and Localbitcoins.

Finland also has licensed (9) EUR stablecoin provider Membrane Finance

There are 139(9¹) legal, and financial entities

Taxation

Tax name	Index
PIT tax Max	54,75%
PIT tax Min	22.5%
Corporate tax (CIT)	20
Min Individual CGT (for crypto)	20
Max Individual CGT (for crypto)	34
Wealth tax Min	0
Wealth tax Max	0
Mining tax	0
TDS tax	0

A detailed guide from VERO (10) that contains most cases of possible crypto taxation in the country.

PIT

PIT up to 55% for residents and 35% - nonresidents

According to the VERO guide above, you pay PIT for mining and staking income. Also, the individual gets crypto as a payment for the service. According to Coinpanda (11), there is a tax-free allowance of 19,000 EUR. The max PIT rate is 54,75%, including federal taxes between 6% and 31.25% and municipal tax rates between 16.5% and 23.5%.

And bad news for holders: You need to pay income for crypto profit before you exchange it for fiat.

CGT

CGT - 30-34% or 20% acquisition cost for crypto purchases;

Income received from spending and exchanging virtual currencies is taxed as capital gain, which is considered capital income. Taxable income is accrued when

you exchange virtual currency for euros or some other official currency

you exchange virtual currency for another virtual currency

you use virtual currency to pay invoices

you pay for goods or services with virtual currency.

According to Coinpanda (12)

Capital gains from the selling of shares, equities, or cryptocurrencies are generally included in the taxable capital income that is subject to a 30% tax rate on the amount up to €30,000, and a 34% tax rate for any amount exceeding this.

Profits from exchanging or selling cryptocurrency are considered capital income for tax purposes and are therefore taxed as Capital Gains Tax. The general rule is that each time you spend or otherwise dispose of a cryptocurrency, you need to pay Capital Gains Tax on the resulting profits.

CIT

CIT rate is (13) 20%, including CGT for entities

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4, 6, and 10)Taxation of virtual currencies. Article

5, 11, and 12)Crypto Tax Guide Finland – Updated 2022. Article

7)COUNTRY UPDATE-Finland: Crypto-asset regulation. PDF-file

8)Northcrypto. Exchange

9)Euro-pegged stablecoin powered by Ethereum launches in Finland. Article

9¹)Osakesäästötilipalvelun tarjoajat