The Norwegian tax administration issued a warning to cryptocurrency traders and called for filing a declaration of income related to cryptocurrency transactions by April 30.
According to a notice from the Norwegian Tax Administration, the government agency recommends all taxpayers who owned or sold cryptocurrency in 2020 to include this information on their tax returns, otherwise they “risk paying additional tax.” The IRS said that only about 2% of cryptocurrency holders in Norway disclosed cryptoasset transactions in 2019, which is less than 4,700 out of approximately 235,000.
“We think that most of the tax gap is due to the fact that some cryptocurrency owners mistakenly assume that data about cryptocurrencies comes to the tax office even before they fill out their tax return, and did not think that they should provide this information,” said Senior Adviser to the Norwegian Tax Administration, Marius Johansen. “Our experience shows that most people will comply with all laws and regulations, and we will help those who invest in cryptocurrency to do it right.”
In Norway, income defined as profits from cryptocurrencies is taxed at a rate of 22%, similar to the capital gains tax levied in the United States. Norwegian taxpayers can receive a 2020 deduction if they have suffered any losses due to cryptocurrency investments, but they may need to back up their claims with documents from exchanges used to store or trade digital assets.
The Norwegian tax administration has explicitly warned taxpayers who refrain from declaring their income in cryptocurrency that they are not anonymous. Johansen said cryptocurrency transactions are “more visible than most people think,” and the agency has been closely monitoring them, having previously identified “many tens of thousands of people” who did not properly report their taxes.
Cryptocurrencies can contribute more to the widening tax gap – the difference between the total tax revenue that must be paid to the government and what it actually receives. According to the Norwegian Tax Service, about $ 20 million in taxable income came to the treasury from cryptocurrency holders.
The Internal Revenue Service (IRS) is also planning to boost budget revenues through taxes on cryptocurrencies. As the head of the IRS recently said, the department is preparing new requirements for declaring income from cryptocurrency transactions.
