Norwegian authorities urge crypto users to declare earnings on upcoming return
“Our experience is that most people will follow all laws and regulations, and we will help those who invest in crypto to do it right,” said Marius Johansen.
The Norwegian Tax Administration has issued a warning to crypto traders in advance of the April 30 deadline to file tax returns.
According to a notice from the Norwegian Tax Administration, or NTA, today, the government agency advised all taxpayers who owned or sold crypto in 2020 to enter it in their returns or “risk paying additional tax.” The NTA said roughly 2% of cryptocurrency holders declared what tokens they owned or earned in 2019, less than 4,700 people out of an estimated 235,000.
“We think a lot of the gap is due to the fact that some crypto owners mistakenly assume that cryptocurrency is pre-filled in the tax return and have not thought that they are the ones who have to list this,” said NTA senior adviser Marius Johansen. “Our experience is that most people will follow all laws and regulations, and we will help those who invest in crypto to do it right.”
In Norway, income identified as gains from crypto is taxed at a rate of 22%, similar to the capital gains tax imposed in the United States. Norwegian taxpayers can receive a deduction in their 2020 filings if they suffered any losses due to crypto investments, but may need to back up their claims with documentation from any exchanges used to hold or trade the digital assets.
The NTA explicitly urged taxpayers holding back declaring their crypto earnings that they were not anonymous. Johansen said crypto transactions are “more visible than many people think” and the agency was following activity closely, identifying “many tens of thousands of people” who previously didn’t report their taxes properly.
Cryptocurrency may become a larger contributor in widening the tax gap — the difference between the total income from taxes that should be paid to the government instead of what it actually receives. In Norway, the NTA reported roughly $20 million of taxed income came from crypto holders.
Lawmakers in the U.S. are considering legislation to address the tax gap, which has grown from roughly $400 billion in 2013 to a reported $1 trillion this year. A bipartisan group reportedly supports a proposed bill from Republican Senator Rob Portman that would be aimed at preventing U.S. citizens from evading taxes on their crypto earnings.
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Author: Turner Wright