What do you think about the taxation of cryptocurrency?

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voyager093
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What do you think about the taxation of cryptocurrency?

Post by voyager093 » Wed Apr 21, 2021 4:05 pm

I am interested in cryptocurrency trading and recently I tried to find information about taxation. There is a topic about taxation of cryptocurrency, and article 2.4 upset me very much. Does anyone have any experience with paying taxes?



What do you think about the taxation of cryptocurrency?

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FinnGuyHelsinki
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Re: What do you think about the taxation of cryptocurrency?

Post by FinnGuyHelsinki » Fri Apr 23, 2021 7:19 am

voyager093 wrote:
Wed Apr 21, 2021 4:05 pm
I am interested in cryptocurrency trading and recently I tried to find information about taxation. There is a topic about taxation of cryptocurrency, and article 2.4 upset me very much. Does anyone have any experience with paying taxes?
It's in line with taxation of other forms of capital gain, be it other currencies or whatever else. The tax payer is responsible for reporting their income. I don't a see reason to get upset, unless you thought of dealing in cryptocurrency as a way to avoid taxes, which generally in Finland is impossible, at least legally. One doesn't necessarily even have to break the law as such, it's enough if one's actions are deemed to have been made in order to avoid taxes.

voyager093
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Re: What do you think about the taxation of cryptocurrency?

Post by voyager093 » Fri Apr 23, 2021 9:20 am

The problem is that if a trader has a lot of transactions, then calculate real gains/losses for each transaction based on FIFO principle is technically impossible. And possibility of using acquisition cost assumption is a big question.

The idea of the topic is definitely not about how to avoid tax. I try to find somebody with experience in cryptocurrency taxation.

Upphew
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Re: What do you think about the taxation of cryptocurrency?

Post by Upphew » Fri Apr 23, 2021 9:58 am

voyager093 wrote:
Fri Apr 23, 2021 9:20 am
The problem is that if a trader has a lot of transactions, then calculate real gains/losses for each transaction based on FIFO principle is technically impossible. And possibility of using acquisition cost assumption is a big question.

The idea of the topic is definitely not about how to avoid tax. I try to find somebody with experience in cryptocurrency taxation.
How is that impossible? Are the transactions done blind?

Finding someone with cryptocurrency taxation experience can be hard, as the taxation rules are new. They might change the rules when you do your taxes and start to push some high frequency trading logs to them...
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FinnGuyHelsinki
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Re: What do you think about the taxation of cryptocurrency?

Post by FinnGuyHelsinki » Fri Apr 23, 2021 10:03 am

voyager093 wrote:
Fri Apr 23, 2021 9:20 am
The problem is that if a trader has a lot of transactions, then calculate real gains/losses for each transaction based on FIFO principle is technically impossible. And possibility of using acquisition cost assumption is a big question.
The same taxation rules apply, I'm 100% certain that "technically impossible" is not considered a valid reason to not have to report everything. I don't see how or why the rules of acquisition cost assumption would differ in case of cryptocurrencies, "lots of transactions" implies that any asset is likely not held long enough to result in tax benefits (under 10 years, the price increase would have to be five fold).
voyager093 wrote:
Fri Apr 23, 2021 9:20 am
I try to find somebody with experience in cryptocurrency taxation.
Probably a good idea, for the practicalities of it.

In general, dealing in "normal" currencies (or basically anything else) is very much analogous to cryptocurrencies, from a taxation perspective. You buy something (worth X amount in euros), and sell/trade it for something else (worth Y amount of euros), and are taxed for each transaction. First and foremost it's the tax payer's responsibility to keep track of those.

voyager093
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Re: What do you think about the taxation of cryptocurrency?

Post by voyager093 » Fri Apr 23, 2021 10:50 am

Upphew wrote:
Fri Apr 23, 2021 9:58 am
How is that impossible? Are the transactions done blind?
No, not in blind :wink:
I developed so-called trading bot. This bot analyzes the market and detects when buying or selling something is profitable. As a result there can be thousands of thousands transactions among a lot of currencies. When, for instance, 100 Euro was invested and bot did a lot of transactions with different amount among different currencies, it is difficult (even impossible) to detect what exactly buying price is for exactly amount of BTC which is sold now.

voyager093
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Re: What do you think about the taxation of cryptocurrency?

Post by voyager093 » Fri Apr 23, 2021 10:54 am

FinnGuyHelsinki wrote:
Fri Apr 23, 2021 10:03 am
The same taxation rules apply, I'm 100% certain that "technically impossible" is not considered a valid reason to not have to report everything.
As i said, reporting is possible, every transactions. But i don't see any way how to calculate real gains/losses. So, i would like to use the acquisition cost assumption for whole amount that i'm going to declare.

But i really have no idea is it possible (legal) or not.

FinlandGirl
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Re: What do you think about the taxation of cryptocurrency?

Post by FinlandGirl » Fri Apr 23, 2021 11:17 am

voyager093 wrote:
Fri Apr 23, 2021 9:20 am
The problem is that if a trader has a lot of transactions, then calculate real gains/losses for each transaction based on FIFO principle is technically impossible.
In the end your profit is the money/value you have in the end minus the money/value you had in the beginning.
It is not obvious to me that you have to do calculations for every transaction since the end result would be the same.
voyager093 wrote:
Fri Apr 23, 2021 9:20 am
The idea of the topic is definitely not about how to avoid tax. I try to find somebody with experience in cryptocurrency taxation.
A Finnish accountant should be able to help, the taxation issues around cryptocurrencies are not that different from taxation issues when buying shares.

betelgeuse
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Re: What do you think about the taxation of cryptocurrency?

Post by betelgeuse » Sat Apr 24, 2021 8:25 am

voyager093 wrote:
Fri Apr 23, 2021 10:54 am
FinnGuyHelsinki wrote:
Fri Apr 23, 2021 10:03 am
The same taxation rules apply, I'm 100% certain that "technically impossible" is not considered a valid reason to not have to report everything.
As i said, reporting is possible, every transactions. But i don't see any way how to calculate real gains/losses. So, i would like to use the acquisition cost assumption for whole amount that i'm going to declare.

But i really have no idea is it possible (legal) or not.
You can. Usually with assets it’s not done because it’s not tax effective. Omavero UI should be logical when declaring.
FinlandGirl wrote:
Fri Apr 23, 2021 11:17 am
voyager093 wrote: The idea of the topic is definitely not about how to avoid tax. I try to find somebody with experience in cryptocurrency taxation.
A Finnish accountant should be able to help, the taxation issues around cryptocurrencies are not that different from taxation issues when buying shares.
An accountant will also be able to tell whether using business rules will be more effective. There are various accounting models available under EVL.

FinnGuyHelsinki
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Re: What do you think about the taxation of cryptocurrency?

Post by FinnGuyHelsinki » Sat Apr 24, 2021 12:28 pm

voyager093 wrote:
Fri Apr 23, 2021 10:50 am
I developed so-called trading bot. This bot analyzes the market and detects when buying or selling something is profitable. As a result there can be thousands of thousands transactions among a lot of currencies. When, for instance, 100 Euro was invested and bot did a lot of transactions with different amount among different currencies, it is difficult (even impossible) to detect what exactly buying price is for exactly amount of BTC which is sold now.
Sounds like it would be perfectly doable to add a transaction log to the implementation, following the FIFO rule as used in taxation. Obviously there has to be a known price for each transaction. Even if not for taxation purposes, personally I'd definitely want to have a log to analyze later on.

voyager093
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Re: What do you think about the taxation of cryptocurrency?

Post by voyager093 » Sat Apr 24, 2021 10:12 pm

FinnGuyHelsinki wrote:
Sat Apr 24, 2021 12:28 pm
Sounds like it would be perfectly doable to add a transaction log to the implementation, following the FIFO rule as used in taxation. Obviously there has to be a known price for each transaction. Even if not for taxation purposes, personally I'd definitely want to have a log to analyze later on.
I have statistics for analysis and improvement trading strategy. But it doesn't contain all transactions.

I broke my brain and finally have implemented algorithm that calculates profit with FIFO principle, seems like it works fine, pretty accurately. But report for one year will contain approximately 1000000 lines (at least 10000 pages A4). I can't even imagine Tax Administration reaction to such report :?

Maaria
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Re: What do you think about the taxation of cryptocurrency?

Post by Maaria » Sat Apr 24, 2021 11:08 pm

voyager093 wrote:
Sat Apr 24, 2021 10:12 pm
FinnGuyHelsinki wrote:
Sat Apr 24, 2021 12:28 pm
Sounds like it would be perfectly doable to add a transaction log to the implementation, following the FIFO rule as used in taxation. Obviously there has to be a known price for each transaction. Even if not for taxation purposes, personally I'd definitely want to have a log to analyze later on.
I have statistics for analysis and improvement trading strategy. But it doesn't contain all transactions.

I broke my brain and finally have implemented algorithm that calculates profit with FIFO principle, seems like it works fine, pretty accurately. But report for one year will contain approximately 1000000 lines (at least 10000 pages A4). I can't even imagine Tax Administration reaction to such report :?
Are you doing day trading?

voyager093
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Joined: Wed Apr 21, 2021 3:55 pm

Re: What do you think about the taxation of cryptocurrency?

Post by voyager093 » Sat Apr 24, 2021 11:17 pm

Maaria wrote:
Sat Apr 24, 2021 11:08 pm
Are you doing day trading?
What do you mean? What does 'day trading' mean?

Maaria
Posts: 133
Joined: Fri Jul 12, 2019 3:49 am

Re: What do you think about the taxation of cryptocurrency?

Post by Maaria » Sun Apr 25, 2021 1:20 am

voyager093 wrote:
Sat Apr 24, 2021 11:17 pm
Maaria wrote:
Sat Apr 24, 2021 11:08 pm
Are you doing day trading?
What do you mean? What does 'day trading' mean?
By day trading, I mean you buy and sell within a very short time frame, mostly within the same day. Swing trading is when you hold it longer but not very long, maybe few days, weeks or months. Hodl is when you hold for a long term.

FinnGuyHelsinki
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Re: What do you think about the taxation of cryptocurrency?

Post by FinnGuyHelsinki » Sun Apr 25, 2021 9:39 am

voyager093 wrote:
Sat Apr 24, 2021 10:12 pm
FinnGuyHelsinki wrote:
Sat Apr 24, 2021 12:28 pm
Sounds like it would be perfectly doable to add a transaction log to the implementation, following the FIFO rule as used in taxation. Obviously there has to be a known price for each transaction. Even if not for taxation purposes, personally I'd definitely want to have a log to analyze later on.
I have statistics for analysis and improvement trading strategy. But it doesn't contain all transactions.

I broke my brain and finally have implemented algorithm that calculates profit with FIFO principle, seems like it works fine, pretty accurately. But report for one year will contain approximately 1000000 lines (at least 10000 pages A4). I can't even imagine Tax Administration reaction to such report :?
Vero.fi states (https://www.vero.fi/henkiloasiakkaat/om ... ivaluutat/) that during April it's possible to provide an attachment detailing the transactions, without the need to individually enter each. I'd suggest to contact Vero and/or a tax lawyer to figure out the details. Vero wants the information for all transactions, and that's what you'll have to provide them. Surely there are others, at least businesses, in a similar situation, and in some way they are able to handle it.


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