The Norwegian Tax Administration is to spend more time investigating ‘hidden' cryptocurrency wealth. They believe hundreds of thousands of Norwegians are not declaring their crypto holdings.
While cryptocurrency is not yet mainstream, many people all over the world have begun to experiment with the likes of Bitcoin and Ethereum. That's especially true in the highly digital societies of Scandinavia.
Cryptocurrency is an internet-based medium of exchange using blockchain technology for decentralisation and transparency. Currency is sent directly between two parties by the use of private and public keys.
Tax on cryptocurrency in Norway
This also means it is not controlled by a central authority, keeping the medium away from government control, in theory at least.
As cryptocurrency has become more popular, governments around the world have struggled to adapt to the technology, especially when it comes to tax.
Norway treats cryptocurrency the same as any other income or wealth when it comes to your personal tax basis. That means if you own or have sold cryptocurrency, you should enter it in the annual tax return so that income tax and wealth tax can be correctly applied.
If you hide this information from the Tax Administration, you risk paying fines and/or additional tax.
How many people pay tax on cryptocurrency in Norway?
In 2019, less than 5,000 reported income or wealth in cryptocurrency. On the 2020 tax return, this number had risen to more than 13,000. In total, NOK 951 million was reported as income, with a total wealth of NOK 7.5 billion.
Read more: A Beginner's Guide to Tax in Norway
However, despite this increase, the Tax Administration knows there is much more that hasn't been declared.
They have identified approximately 70,000 people with cryptocurrency holdings and suspect the real number could be as high as 300,000–more than 5% of Norway's population.
“Even though we see an increase, we are not naive. There are far more who do not speak out, than those who do,” said Odd Woxholt from the Norwegian Tax Administration.
Crypto tax investigation group to expand
For a few years now, the Norwegian Tax Administration has had a unit dedicated to working with cryptocurrency. Among other things, there is now a dedicated line-item on the tax return for crypto.
Woxholt said more people will now work in the group, with the task of finding those who do not declare income or wealth held in cryptocurrency. The Administration believes that not everyone who has withheld information has done so deliberately, so communication will be an important part of the job.
Many people who are used to getting tax returns pre-filled with correct information from their employer and bank may not realise that cryptocurrency information is not added automatically.
“Many of the owners have not familiarised themselves well enough with the rules regarding tax on cryptocurrency. We see that most people want to follow laws and regulations, and we want to help those who invest in crypto to do it right,” he said.
