A Swedish crypto trader named Linus Dunker received a bill from the Swedish Tax Agency (STA) which required him to pay a shocking amount of approximately $1 million for taxes. He claimed that the demand was absurd since the amount was 300% of the profit gained from his Bitcoin (BTC) trading.
Dunker stated that he traded BTC worth 25 million SEK (Swedish krona), which is approximately $2.77 million, between years 2014 and 2016, earning him a moderate profit. He claimed that he initially thought that crypto trading fell under the ‘hobby activity’ category in the year 2014 as the local tax laws did not specify what the activity should be categorized as clearly. The STA only contacted and asked him to put his crypto trades under the ‘capital income’ category in 2016.
Dunker followed the agency’s instructions, filing his BTC trades accordingly in his tax forms. He added an additional note stating his willingness to make corrections if he made mistakes in his tax forms as he was still unsure of the proper means to declare his crypto trades’ earnings. He claimed that the next response he got from the STA was when the agency audited him and sent him the tax bill, taxing him a total of 300% of his BTC trades’ earnings.
Additionally, Dunker voiced out his frustration over the fact that the STA treated his crypto trades as business activities and not personal capital gains. This caused him to be required to pay more tax compared to the 30% taxed on typical personal capital gains.
The STA stated that Dunker did not leave out the price of his very first BTC purchase in which he paid in cash, resulting in his trading profits getting taxed at a higher rate. The agency added that according to law, this would increase Dunker’s tax burden.
Recently, the STA has been actively reviewing cases related to cryptocurrencies as trading of the digital asset become more popular in the country. The number of crypto traders investigated by the agency increased by ten folds from 2017 to 2018, with around 400 crypto traders’ having their trading activities reviewed in the latter year. According to Henrik Kisterud, control coordinator of the STA, more resources will be distributed to investigations on crypto as last year’s result revealed “unrecognized activities” being carried out in the market.