Prior to Norway’s April 30 deadline for filing tax returns, the Norwegian Tax Administration has sent a notice to investors in digital currencies.
The Norwegian Tax Administration posted a notification on Wednesday advising all citizens who bought or traded digital currency in 2020 to include it on their returns or they will have to pay extra tax. A ccording to the NTA, fewer than 4,700 citizens out of an approximate 235,000 digital currency owners reported what cryptocurrencies they possessed or received in 2019.
“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, revenue known as cryptocurrency profits is levied at a level of 22%, which is close to the capital gains tax levied in the US. If any damages were incurred as a result of crypto transactions, Norwegian taxpayers may be eligible for a deduction on their 2020 tax returns, yet they have to keep relevant documents from any platforms that they used to store or sell the digital currencies.
The NTA made it clear that citizens who do not declare their digtial currency profits are not hidden. Digital currency transfers are more transparent than most people believe, according to Johansen, who added that the department was actively monitoring activities and had identified numerous people who had historically failed to adequately record their taxes.
Digital currency could play a bigger role in expanding the revenue deficit, which is the disparity between the overall benefit from taxation that the authority could collect and what it currently collects. The Norwegian Tax Administration (NTA) estimated that cryptocurrency owners paid approximately $20 million in taxable revenue.
The tax gap in the United States has risen from approximately $400 billion in 2013 to an estimated $1 trillion this year, prompting legislators to seek bills to narrow it. According to reports, a bipartisan group promotes Republican Senator Rob Portman’s new bill to prohibit U.S. residents from avoiding taxation on their cryptocurrency profits.