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Swedish Bitcoin Miners Face $90 Million Tax Bill After Investigation

Swedish Bitcoin Miners Face $90 Million Tax Bill After Investigation

Apr 18, 2024
Bitcoin Mining

Swedish Bitcoin Miners Face $90 Million Tax Bill After Investigation

An investigation by Sweden's tax authority, Skatteverket, has resulted in a hefty $90 million tax demand for 18 Bitcoin mining firms. The probe, which spanned from 2020 to 2023, scrutinized 21 Bitcoin mining companies and alleged that a majority had filed "misleading or incomplete" tax information to exploit tax incentives.

The Skatteverket alleged that several firms misrepresented their business operations to evade paying value-added tax (VAT) on taxable activities. Others were accused of manipulating reports to avoid import taxes on mining equipment and income tax on the revenues generated from mining.

In the words of the Skatteverket, "The described approach leads to tax disappearing from the country in the form of incorrect payments of input VAT, unpaid output VAT and unreported crypto assets." The Bitcoin mining firms are now obligated to remit over 990 million Swedish krona ($90 million), which comprises 932 million krona ($85.4 million) in unpaid VAT and an additional 57.9 million krona ($5.3 million) in tax surcharges.

Although the implicated firms disputed the tax agency's claims, the administrative court upheld the appeals of only two companies, adjusting the total amount accordingly.

This tax development follows the acquisition of a commercial property and data center in Boden, Sweden, by Hive Digital Technologies. Johanna Thornblad, Hive's country president for Sweden, remarked on their commitment to "sustainable practices, environmental responsibility, and energy efficiency" with their new "green" energy-powered data center.

According to a report by Skatteverket, the investigated data centers employed strategies such as "falsely claiming to provide computing services for foreign clients to qualify for VAT deductions," while actually engaging in non-deductible Bitcoin mining.

In response to Skatteverket's actions, HIVE, which operates two Swedish subsidiaries, declared in its Q4’23 earnings report that they had filed formal appeals and did not recognize the claimed tax debt as probable, arguing it was incompatible with current law.

Furthermore, Sweden's decision in July 2023 to revoke a 97% electricity tax break for data centers, initially intended to bolster the IT sector, came after recognizing that it inadvertently incentivized Bitcoin mining rather than creating the expected job growth.

Skatteverket Report

Cointelegraph Article

TheMinerMag Article


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