Tax concerns are always a worry, as some crypto enthusiasts under certain jurisdictions must now include a cryptocurrency element in their annual calculations, but spare a thought for Swede Linus Dunker who has been hit with a hefty USD 1 million tax bill.
The beleaguered crypto trader has just received his annual tax bill from the Swedish Tax Agency (STA) and is now trying to appeal against calculations on back tax due dating back to 2014 when Swedish tax law regarding cryptocurrency was anything but clear.
Dunker claims the “unreasonable” tax demand hasn’t taken into account some basic history and have included some staggering percentages: a huge 300% of his total profits. The state explains the high rate of taxation was incurred due him not deducting the price of his initial Bitcoin purchase paid in cash.
In 2014, claims Dunker, Bitcoin was regarded as a “hobby activity” and the country’s tax laws had at that time not established any clear way of dealing with the growing phenomenon. In 2016, he was eventually contacted by the STA telling him he should include his cryptocurrency earnings in his returns as capital income.
Dunker, perhaps naively, instructed STA to adjust his figures as necessary when he finally sent in a return in 2016. He expected to receive a tax bill of 30%. After no communication from the tax office until 2018, the bill suddenly arrived showing that he had a tax debt just short of USD 1 million.
The trader has suggested that those submitting returns need to be aware that the STA considers earnings through cryptocurrency transacting as a business rather than personal, and should expect their own unpleasant surprises now the ground rules are there to see.
The STA is currently busy investigating 400 crypto traders, due to what control coordinator Henrik Kisterud calls unrecognized activities”. Meanwhile, Dunker now has a week left to pay off his tax debt.
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