The Norwegian Tax Administration has issued a warning to crypto traders in advance of Norway’s April 30 deadline to file tax returns.
According to a notice from the Norwegian Tax Administration on Wednesday, the government agency advises all taxpayers who owned or sold crypto in 2020 to enter it on 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 warned taxpayers who are holding back from declaring their crypto earnings that they are 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 and 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.
Julia started off her career as a travel blogger, hitchhiking and exploring the world as a nomad. After many years of traveling with little to nothing on her, volunteering, and waiting tables from town to town across Europe and US, she met a crypto trader who opened her eyes to how she can invest and make money with blockchain. Nowadays she is a trader and a blogger, writing about new currencies, NFTs, p2e platforms, and DeFi in general.