We use essential cookies to make our site work and to improve user experience, personalise advertisements, and analyse web traffic. By clicking 'Accept', you agree to our website's cookie use as described in our Cookie Policy.
.png)
Curious about crypto taxes in Thailand? Explore the comprehensive guide, from legalities to tracking transactions. Discover how to navigate the evolving tax landscape.
Wondering How to Navigate Crypto Taxes in South Africa? Read our detailed guide on South African Crypto Taxes!
Curious about crypto taxation in Luxembourg for 2023? Our guide covers everything you need to know about crypto taxation in Luxembourg.
Crypto investments are fun, but crypto taxes aren’t. Most Denmark residents have no idea how crypto gains are taxed, and that’s because the guidelines around crypto taxation in Denmark are comparatively new and still evolving. Danish tax authorities consider crypto to be personal assets from a tax perspective, which essentially means that you will pay taxes on them whenever you treat them as a speculative asset or use them for business purposes.
The guidelines around crypto taxation are comprehensive and cover almost every aspect of crypto taxation. However, one might find it overwhelming to get acquainted with the guidelines and then decode them to cater to their specific transactions.
That’s why we’ve put together this comprehensive guide on crypto taxes in Denmark to help you keep up with the new and existing guidelines issued by the Danish tax authority Skattestyrelsen.
Once you finish this tax guide, you’ll have everything you need to know about crypto taxation in Denmark. This guide will be regularly updated as the tax authorities issue new guidelines. So make sure you keep revisiting this guide to stay updated.
.png)
17/04/24- Updated to accommodate ICO Taxes
17/04/24- Updated to accommodate NFT and DAO taxes
Bitcoin and other cryptocurrencies are classified as personal assets in Denmark, which essentially means that every time someone treats crypto as a speculative asset or uses it for business, tax liabilities follow.
Note that any crypto you purchase and hold is considered a speculative asset by default, resulting in taxable gains or losses. If you’re not sure whether or not your assets classify as speculative, you also have the option to request a personal assessment.
According to Skattestyrelsen the tax treatment of crypto assets depends on the specific nature of the transactions. Activities like capital income from trading, receiving crypto through airdrops, or earning crypto through mining are considered personal income and are subject to a variable tax rate that may go up to 52%. On the other hand, trading in stablecoins is recognised as deriving gains from a financial contract, leading to it being classified as capital income and subject to a capital gains tax of up to 42%.
Here’s an example to better understand how taxes work in Denmark.
Consider the following transactions:
22/01/13 - Fredrik buys 2 BTC for 1,20,000 DKK each
22/02/22 - Fredrik buys 1 ETH for 10,000 DKK
22/03/28 - Fredrik buys 1 ETH for 11,000 DKK
22/05/21 - Fredrik sells 2 BTC for 1,50,000 DKK each
22/06/04 - Fredrik sells 1 ETH for 15,000 DKK
As evident from the above ledger of transactions, two disposals were made, so let’s see how these disposals will be taxed.
1st Disposal
2 BTC sold for 1,50,000 DKK each
These tokens were acquired for 1,20,000 DKK each on 22/01/13
Cost Basis (Acquisition Price) = 1,20,000 DKK
Disposal Amount = 1,50,000 DKK
Capital Gains = Disposal Amount - Cost Basis = 1,50,000 - 1,20,000 = 30,000 DKK (for 1 BTC)
Gain from 2 BTC = 2*30,000 = 60,000 DKK
2nd Disposal
1 ETH sold for 15,000 DKK
Since two ETH tokens are acquired at different dates and prices, calculating the acquisition price becomes a little complex.
Here we have to use an accounting method to identify which ETH token was disposed of. Every country suggests a specific accounting method for calculating the cost base.
Skattestyrelsen recommends using the FIFO accounting method. We will discuss more about this method later in the guide. For now, a simple way to understand how FIFO accounting works is that the first asset you buy is the first asset you sell.
So the first ETH was acquired on 22/02/22 for 10,000 DKK
Cost basis = 10,000 DKK
Disposal Amount = 15,000 DKK
Capital Gain/loss = Disposal amount - Cost Basis = 15,000 - 10,000 = 5,000 DKK
Collective gain from both disposals = 60,000 + 5000 = 65,000 DKK
This is your tax base and taxes will be levied on it.
Sometimes when investors buy the same asset multiple times at different prices, calculating the acquisition price or cost basis for disposal becomes very challenging. That’s exactly why one must rely on specialised accounting methods as specified by the tax authorities.
The Danish tax authorities recommend using the FIFO accounting method to calculate the cost basis if you’re a Danish resident. The FIFO or First-In-First-Out accounting method implies that the first token you buy is the first token you sell. And this accounting method is beneficial when dealing with multiple transactions from across your portfolio of tokens.
Here’s an example to better understand how it works.
Consider the following transactions:
2022/01/13 - Astrid bought 1 BTC for 1,10,000 DKK
2022/03/12 - Astrid bought 1 BTC for 1,20,000 DKK
2022/04/15 - Astrid sold 1 BTC for 1,50,000 DKK
As evident from the above ledger of transactions, two BTC tokens were purchased at two different dates and prices. So to determine which token was sold on 2022/04/15, we will use the FIFO accounting method.
Since the first token purchased will be the first one to be disposed of. The BTC token purchased on 2022/01/13 will be the one disposed of on 2022/04/15.
Cost Basis = 1,10,000 DKK
Disposal Amount = 1,50,000 DKK
Capital Gain/loss = Disposal Amount - Cost Basis = 1,50,000 - 1,10,000 = 40,000 DKK
The Skattestyrelsen doesn't consider crypto as fiat currency but as a personal asset for tax purposes. And personal assets are only taxed in Denmark under two specific circumstances:
However, if you think you can evade crypto taxes just by HODLing your assets, you might be in for a surprise because the Danish tax authorities view your holdings as speculative and hence subject to taxes.
If you have any doubts regarding whether your assets are speculative or not, you can get your holdings audited by them.
The Danish tax authorities differentiate between Bitcoin, altcoins, and stablecoins. If you happen to be involved in transactions with Bitcoin and altcoins, chances are that you’ll attract income tax liabilities. However, if you’ve been trading and investing in stablecoins, the gains, if any, will be considered capital gains and taxed accordingly.
Denmark doesn’t have separate tax rates for short-term and long-term capital gains. The tax on capital gains in Denmark is 42%.
The first step in determining your gains or losses involves calculating the cost basis for each asset within your portfolio. Your cost basis represents the amount you paid to acquire the asset, including any associated fees like gas fees or transaction fees.
Once you have the cost basis, you can simply subtract it from the disposal amount to ascertain your gain or loss. If it’s a gain, you will be required to pay a flat income tax on that amount. Conversely, if it results in a loss, you are not obligated to pay any taxes. However, it's important to note that you may be able to offset these losses against certain gains if specific criteria are met, as discussed in the preceding sections.
Here’s an example to better understand how capital gains are taxed.
Consider the following transactions:
2022/01/19 - Emma buys 2 BTC for 1,00,000 DKK
2022/03/12 - Emma buys 3 ETH for 11,000 DKK
2022/04/11 - Emma buys 1 BTC for 1,10,000 DKK
2022/06/14 - Emma sells 1 BTC for 1,40,000 DKK
2022/08/10 - Emma sells 2 BTC for 1,50,000 DKK
2022/10/14 - Emma sells 2 ETH for 15,000 DKK
As seen in the above ledger of transactions, three disposals were made. We will calculate the gains for each disposal one at a time.
1st Disposal
1 BTC sold for 1,40,000 DKK
This BTC is the same one acquired on 2022/01/19 for 1,00,000 DKK
Cost Basis = 1,00,000 DKK
Disposal Amount = 1,40,000 DKK
Capital Gain/loss = Disposal Amount - Cost Basis = 1,40,000 - 1,00,000 = 40,000 DKK
2nd Disposal
2 BTC sold for 1,50,000 DKK each
There are two different types of tokens in this bunch.
BTC-1 from 2022/01/19 was acquired for 1,00,000 DKK and BTC-2, was acquired on 2022/04/11 for 1,10,000 DKK.
So for disposal of BTC-1:
Cost basis = 1,00,000 DKK
Disposal Amount = 1,50,000 DKK
Capital Gain = 1,50,000 - 1,00,000 = 50,000 DKK
And for disposal of BTC-2:
Cost Basis = 1,10,000 DKK
Disposal Amount = 1,50,000 DKK
Capital Gain = 1,50,000 - 1,10,000 = 40,000 DKK
Total Gain = 50,000 + 40,000 = 90,000 DKK
3rd Disposal
2 ETH sold for 15,000 DKK each
These tokens were acquired on 2022/03/12 for 11,000 DKK
Cost Basis = 11,000 DKK
Disposal Amount = 15,000 DKK
Capital Gain = 15,000 - 11,000 DKK = 4,000 DKK (for 1 ETH)
Gain from 2 ETH tokens = 2*4000 = 8,000 DKK
Collective Gain from 3 Disposals = 40,000 + 80,000 + 8,000 = 1,28,000 DKK
Transactions that result in a gain may attract income tax or capital gains tax depending on the nature of those gains. If you trade or invest in crypto assets, the gains you make would be treated as income. While if you hold stablecoins and use them as an investment instrument, then the gains will attract CGT.
The personal income tax rate in Denmark constitutes four discrete tax brackets:
All income earners pay a flat 12.11% bottom bracket tax. The income is taxed after deducting the personal allowance and the 8% labour market tax.
Individuals earning above 552,500 DKK in Denmark are liable to pay the top tax bracket, which is an extra levy of 15% on their income. It is worth noting that this tax is calculated after accounting for labour market contributions.
In Denmark, all taxpayers are required to pay the labour market tax and municipal tax. The labour market tax is fixed at 8%, whereas the municipal tax varies, with the mean rate being 25%. Although crypto assets are exempt from the 8% market tax, understanding this tax is important for effective tax planning.
Note that a regulation in Denmark limits the total amount of an individual's bottom-bracket tax, top-bracket tax, and municipal taxes. According to this regulation, these taxes combined must not exceed 52.06% of the individual's income. This serves as a threshold to ensure that the tax burden remains within a limit for taxpayers in Denmark.
If you have a crypto income, let’s say from ICOs, crypto-to-crypto trades, or as salary you need to be able to calculate your net income and report it to the tax authorities on your tax return. For calculating your crypto income, you should keep track of the fair market value of the tokens in DKK on the day of receipt and add them all together to calculate your net income.
It might get you into a lot of trouble as the Skattestyrelsen can trace your crypto transactions from as far back as 2019. The Danish tax agency collaborated with major crypto exchanges operating within Denmark, gaining access to KYC details of investors. Moreover, the tax agency has sent letters to cryptocurrency investors who are suspected of evading taxes.
So you should dismiss any ideas of underreporting your crypto income on your tax return immediately because such actions could lead to severe consequences and legal trouble. It is highly recommended to comply with the tax regulations and accurately report crypto income to avoid any potential repercussions.
Crypto losses are a complicated piece of the Danish crypto tax puzzle. Generally, you’re not supposed to write off any of your losses against your gains, but there are certain circumstances under which you can do that.
If you have bought or sold the same assets over a financial year while simultaneously making gains or losses, you can write these losses off against your gains, given that you haven’t purchased new assets in that span.
For instance, if you have bought 20 ETH tokens and then sold 5 tokens twice within the financial year, making a gain in one and a loss in another. Then you can offset your loss against these gains. However, if you sold 5 tokens twice and bought 3 new tokens after that, then you cannot write off your losses.
Also, it’s important to note that you cannot offset the losses from one token against the gains made from another token.
Based on previous rulings by the Danish Tax Agency, the loss of access to cryptocurrency does not constitute a disposal event, and therefore, cannot be claimed as a tax deduction. However, if you can substantiate the permanent loss of access to your cryptocurrency, you may request a binding ruling and write them off as a special case.
However, you might need assistance from tax experts and legal consultants to make the binding case strong enough to be considered by the tax authorities.
Although there is no dedicated tax break program in Denmark, there are some existing laws that allow you to reduce your tax bill to some extent.
Although most crypto transactions attract tax liabilities in Denmark, the Danish tax authority considers some transactions to be tax-free:
All cryptocurrency transactions that involve exchanging crypto for fiat currency or other assets, or that generate income, are considered taxable in Denmark. Listed below are some of these transactions:
According to a recent notification published by the Danish tax authorities, crypto mining is considered a hobby business from a tax perspective, and the tokens received as mining rewards are subject to income tax.
Upon receipt, these tokens will be subject to income tax based on their fair market value at that time. Apart from that, any subsequent disposition will also attract income tax liabilities.
Staking rewards are considered to be personal income from a tax perspective and hence attract income tax. However, according to a recent notification issued by the tax authority, your gains are only taxed when you can finally transact with them. This is particularly useful for those involved in ETH staking, because users receive ETH staking regards much later.
Note that any gains you make by selling the staking rewards later will be taxed as capital gains.
Forks
According to the latest ruling by the tax authorities, soft forks are non-taxable since no new tokens are created, while tokens received from hard forks attract income tax liabilities at the time of disposal. However, it’s important to note that these tokens inherit a cost basis equal to 0 DKK.
Airdrops
The tax authorities are yet to issue clear guidelines on the taxation of airdrops. However, we can infer from the existing guidelines that the tax treatment of tokens received as airdrops will be similar to that of gifts.
Based on the latest ruling published by the Skattestyrelsen, crypto gifts can be tax exempt if they are considered speculative by the tax authorities.
In Denmark, gifts are typically tax-free up to a maximum threshold of 69,500 DKK. However, this exemption is applicable only if you’re gifting your assets to your child, stepchild, grandchild, parent, stepparent, or an individual with whom you’re sharing your living space with for at least 2 years.
In cases where the value of the gift exceeds this threshold, a gift tax rate of 15% will be levied.
Crypto donations are tax deductible in Denmark as long as you’re donating to a registered charity. When you donate to a registered charity, you automatically receive your tax deduction because the charity will report the donation to the tax authorities against your civil registration number. The maximum allowable deduction was 17,200 DKK in 2022.
In a decision dated 3rd April 2018, tax authorities clarified that margin trades are to be treated as future contracts since they are speculative in nature based on the guidelines covered in section 29(1) of the capital gains act.
Note that the gains and losses incurred will be taxed separately for every contract, and the capital gains and losses will be calculated on a rolling basis. Therefore, regardless of whether you realise your gains or losses at the end of the tax year, you will have to report these gains or losses in the contract and pay your taxes.
In Denmark, only losses within the same investment class can offset gains. Losses from one type of investment cannot be used to offset gains from another type. For example, losses from margin trades cannot be used to offset gains from CFDs. To qualify as a write-off pair, the losses and gains must belong to the same investment class.
Based on a previous ruling, the tax authorities have specified that any new tokens received through ICOs should be treated as assets. This means that ICO gains are subject to taxation under the State Tax Act.
The State Tax Act states that speculative assets must be treated as taxable income. Therefore, individuals are required to report their ICO gains/losses and pay income tax on the gains, exempt from labour market contributions, while any losses incurred can be deducted.
ICO taxation is similar to that of crypto-to-crypto trades, where one exchanges tokens, and the valuation is based on local currency.
NFTs
In Denmark, NFTs are generally taxed in the same way as other cryptocurrencies, such as Bitcoin, altcoins, and stablecoins. The tax treatment of NFTs depends on the purpose for which they are acquired and whether they are held as an investment or used for business purposes.
If you acquire NFTs as an investment, any profits made from the sale or exchange of the NFTs are considered taxable and subject to capital gains tax.
If you use NFTs for business purposes, such as in the creation and sale of digital art, the income generated from the sale of the NFTs is considered taxable and subject to income tax.
DAOs
The Danish tax authority is yet to release concrete guidelines on the taxation of income from DAOs. We are constantly on the lookout for new guidelines on the same and will add all relevant details here as soon as new guidelines hit our radar.
Meanwhile, we suggest seeking guidance from experienced tax professionals on how such transactions are taxed to avoid legal complications in the future.
The Danish tax authorities have not yet provided clear guidelines on how to tax income from Defi transactions. However, we can infer from existing policies and taxation trends that the tax treatment of Defi transactions will likely resemble that of Bitcoin, altcoins, NFTs, and stablecoins.
Existing guidelines clarify the taxation of income from crypto staking. They classify staking rewards as personal income, subjecting them to income tax. However, there is a condition: staking income is taxable only when you receive the tokens and can dispose of them as part of your portfolio. If you do not have the rewards in your wallet or portfolio, no taxes need to be paid on them.
In Denmark, the tax year runs from 1st January to 31st December and taxpayers must pay their taxes by 1st of May every year. Individuals with non-Danish income, the deadline extends to 1st of July. Note that starting mid-March 2023, individuals can use the online portal, E-tax, to fulfil their tax reporting requirements.
You can report your crypto taxes through Skattestyrelsen’s E-tax portal from the comfort of your home. Here’s a stepwise tutorial on how to do that:
Step 1- Log in to the E-Tax Portal
Go to the E-tax portal and log in with your Civil Registration Number and E-tax password. If you don't have it you can apply for one on the portal.
Step 2- Select the Tax Return
On the main page of the E-tax portal, select "Indkomst" (Income) and then "Forskudsopgørelse og årsopgørelse" (Advance assessment and annual statement). Then, select the year for which you want to file the tax return.
Step 3- Check your Pre-Filled Information
The E-tax portal will pre-fill your information from previous years, such as your name, address, and personal information. Check to make sure that this information is correct.
Step 4- Report your Crypto Income
On the "Indkomst" (Income) page, you will see a section for "Andre indtægter og fradrag" (Other income and deductions). Here, you can report your crypto income by selecting "Anden idioms" (Other income) and entering the amount of your crypto income.
You need to report income from multiple sources in different sections. Here’s a section-wise breakdown:
Step 5- Report your Crypto Capital Gains
If you have made any capital gains from the sale of cryptocurrencies, you will need to report these on the "Kapitalindkomst" (Capital income) page. Select "Aktier mv." (Shares, etc.) and then "Aktieavance og anden kapitalindkomst" (Share gains and other capital income). Enter the amount of capital gains from the sale of cryptocurrencies.
Step 6- Check your Tax Calculation
The E-tax portal will calculate your tax liability after reporting your crypto income and capital gains. Check to make sure that the calculation is correct.
Step 7- Submit your Tax Return
If you agree with the tax calculation, submit your tax return by clicking "Godkend" (Approve). You will receive a receipt and confirmation of your submission.
Note that these steps are to be followed after you’ve completed all your tax calculations so that you can accurately co-relate all the tax calculations done by the E-tax software and identify any discrepancies to avoid overpaying.
If you find tax calculations intimidating(like most investors do), you can use online tax software like Kryptoskatt that can easily generate legally compliant tax reports in a matter of minutes by auto-fetching all your details from across your investment pool.
The Danish Tax Agency has conducted audits of Danish taxpayers' cryptocurrency transactions in the past. Therefore, it is crucial to keep accurate records of your cryptocurrency transactions to calculate profits and losses for reporting in your annual tax return and case of an audit.
Therefore it’s advisable to keep the following records:
Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptoskatt can make this task easier for you:
If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.
There’s no way to legally avoid paying crypto taxes in Denmark. However, there are some strategies you can use to reduce your tax bill. Here are some of the most commonly used ones.
You can refer to the section titled “Tax Credits/Incentives” for more details on this.
Yes, cryptocurrencies are legal in Denmark. The Danish Financial Supervisory Authority (FSA) has issued guidelines on how cryptocurrencies are regulated and treated under Danish law. Cryptocurrency exchanges and trading platforms are required to register with the FSA and comply with anti-money laundering (AML) and know-your-customer (KYC) regulations. Additionally, income and gains from cryptocurrency investments are subject to taxation.
In Denmark, cryptocurrencies are treated as assets for tax purposes. The tax treatment of cryptocurrencies depends on the purpose for which they are acquired and whether they are held as an investment or used for business purposes.
If you acquire cryptocurrencies as an investment, any profits made from the sale or exchange of the cryptocurrencies are considered taxable income and subject to capital gains tax. The capital gains tax rate in Denmark varies depending on the size of the gain, the duration of the investment, and other factors.
While if you use cryptocurrencies for business purposes, such as in the creation and sale of digital products or services, the income generated from the sale of the cryptocurrencies is considered taxable income and subject to income tax. You may also be able to deduct expenses related to the creation and sale of digital products or services, such as software or platform fees, to reduce your taxable income.
The Danish tax year spans from January 1st to December 31st annually. To file and submit your tax return, you have until May 1st each year (or July 1st if you have non-Danish income). For the 2022 financial year, the reporting deadline is May 1st, 2023, and the E-tax online portal for tax reporting opens in mid-March 2023.
Any assets that you buy, hold or collect in an attempt to make a profit at some later date can be considered speculative assets. The Danish Tax Agency regards crypto assets as speculative investments, which means that any gains or losses are subject to taxation.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!
Curious about crypto taxes in Thailand? Explore the comprehensive guide, from legalities to tracking transactions. Discover how to navigate the evolving tax landscape.
Wondering How to Navigate Crypto Taxes in South Africa? Read our detailed guide on South African Crypto Taxes!
Curious about crypto taxation in Luxembourg for 2023? Our guide covers everything you need to know about crypto taxation in Luxembourg.
