Interesų grupė
What is the current state of taxation of crypto assets in Sweden? Since 2018, Monetax (software for tax reporting in Sweden, built by RaJo Software AB) has provided hundreds of tax reports for our customers in Sweden. Only 3,000 private individuals, according to the Swedish Tax Agency Skatteverket, annually choose to declare their capital gains and losses with crypto assets in recent years. Without a significant stretch of the imagination, one could assume that the number is far larger just by looking at the number of members in chat groups, forums, and other internet channels in comparison. Figures from neighboring countries with smaller populations, such as Norway and Finland, suggest hundreds of thousands of investors in these countries. Why would Sweden be any different? Via the booking platform Boka.se, juridical persons in Sweden can book calls with us at Monetax.
…be any different? Via the booking platform Boka.se, juridical persons in Sweden can book calls with us at Monetax. In this way, we get in touch with juridical persons, private individuals, and companies who have both invested and not done so but are considering doing so. Throughout these calls we receive questions concerning cryptocurrencies from these parties. Questions like the following; • How can crypto-assset X be used as a payment method in my company and what does that mean for my accounting or my tax reporting? • How should mining be taxed? Can I go to jail for this? Do I need to pay taxes for this today? • What are the tax consequences of DeFi, lending- or stakin- opportunities presented by various companies online? • If I am being tax audited do I need to compromise all my private data like wallet adress and exchange activity through API-keys in order to avoid tax penalties?
…all my private data like wallet adress and exchange activity through API-keys in order to avoid tax penalties? When we take these inquiries to our contact persons at the Swedish Tax Agency, Skatteverket, it takes months for the government to determine how these different new assets are affected by existing legislation and how these crypto assets should be taxed. Many raised issues are still under investigation and won't be decided before the tax reporting period has ended. Instead, we get recommendations on how to interpret the taxation laws on our own.
…the tax reporting period has ended. Instead, we get recommendations on how to interpret the taxation laws on our own. In consequence due to inadequate legislation, lack of reporting from crypto service providers, lack of resources and time on our part, and lack of knowledge of the individual juridical entities we try to help, the tax reports accuracy is not legally secure, and we must tell our customers to report it as “öppen yrkan”, which really means suggestion, to avoid taxation penalties. Skatteverket might come to a contrary conclusion while doing a tax audit. Also, the tax report Monetax do provide cannot be accurate when there is insufficient information from the crypto-asset service provider or in some cases even the blockchain itself to do the neccessary calculations.
…the crypto-asset service provider or in some cases even the blockchain itself to do the neccessary calculations. Thus, the fear of tax surcharges always remains both for us as a software supplier of the reports, but above all for the juridical person who is a customer and needs to report their taxes in order to not be a law abiding citizen. However, in our case due to our terms and conditions, the juridical person takes full responsibility for the tax reports we assemble because our tax reports are only for informational purposes. So the risk is never ours at Monetax, and that leaves our customers in a tricky spot.
…only for informational purposes. So the risk is never ours at Monetax, and that leaves our customers in a tricky spot. And one even bigger question remains: If we - who is trying to do this every day with our own custom built tools - cannot create a tax report with overwhelmling confidence, then how will Skatteverket, the Swedish Tax Agency, with less knowledge and lack of own software and data fetching utilities, even have a chance to do an audit? Ref. Ares(2021)3844719 - 11/06/2021 In the end, it will simply be more manageable for judicial entities to refrain from tax reporting. The rules are too complex. Knowing how difficult it is for the authorities to catch an individual juridical entity also means that many choose to take the risk and omit the report.
…authorities to catch an individual juridical entity also means that many choose to take the risk and omit the report. Sometimes, these individuals, are also thinking about moving out of Sweden because of this, and usually mentions Portugal as a destination country. Customers with us have also been under tax audits by the Swedish Tax Agency for months. The record is approximately nine months, and there are simply no tools even within the tax agency to efficiently process the information from us nor the crypto assets service providers nor the blockchain. The complexity leads to other consequences in society; for example, banks begin to block or penalize individuals from their services for the same reasons. When the transparency between the crypto world and the existing financial world is non-existent, it leaves an enormous responsibility on the individual.
…crypto world and the existing financial world is non-existent, it leaves an enormous responsibility on the individual. The individual usually needs to provide a third party, for instance their bank, with complete transaction flows to continue to be a customer. One example of this as mentioned banks in Sweden, where a juridical person that cannot provide the necessary information risks their bank relationship while interacting with crypto assets. The consequences are disatrous. Mainly because close to every software application in Sweden uses an identity software called BankId for identification online with organizations and the government, and losing it is the same as being frozen out from the system. A juridical person needs a bank relationship to have BankId. Therefore, the risks and consequences of using crypto assets in Sweden are enormous. How should the taxation and regulation be?
…the risks and consequences of using crypto assets in Sweden are enormous. How should the taxation and regulation be? Monetax, and the company RaJo Software AB, do not have a firm position on tax issues but speculate and change opinions rather fluently as these are challenging issues, and new information arises every day. In general, we are cautiously optimistic about a new legal framework at the European level and later implemented on a national basis.
…are cautiously optimistic about a new legal framework at the European level and later implemented on a national basis. Above all, we believe that well-thought- out legislation and the start-up of controlling bodies with a focus on the following points would be suitable for simplifying the situation in Sweden and hopefully the rest of the Europe: • Trading venues such as exchanges, brokers, and trading platforms, and wallet solutions that hold cryptocurrencies as client funds or, in a bank-like scenario, should, according to a standardized specification, provide open APIs for accessing all transaction history made by a juridical entity on this platform. This information should be accessible and shareable to/ by the individual legal entity, which can then provide authorities, tax calculation software, accounting software, etc., with this information in the standardized format.
…authorities, tax calculation software, accounting software, etc., with this information in the standardized format. This would limit, and possibly remove, the insanely complex task of trying to fetch data from various crypto-assets sources that are needed today for reporting purposes. • Every crypto service provider must be able to present the tax consequences that have occurred on that platform. Thus, the tax rules also need to be adapted to make this possible for each platform or scenario. • Simplified tax rules for private individuals with the ambition of having a minimum ceiling before tax reporting are required. For example, profits below € 10,000 could be tax-free for private individuals. Everyone above that limit has the resources to hire professional assistance.
…could be tax-free for private individuals. Everyone above that limit has the resources to hire professional assistance. • Clear and distinct accounting plans for companies so that the innovation within companies is not hampered because no one knows how cryptocurrencies are accounted. We need to stimulate innovation, not stop it. • Wallets owned by private individuals or companies for their own usage and control should not be included in any reporting requirements or provide their address, keys, or anything similar. Forcing privately used wallets to report their balance sheet or transaction historywould directly cause some integrity issues and could mean harm to the individual if an address is leaked and their net worth is publicly available.
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