Denmark Crypto Tax Guide 2024 (2024)

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. 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.

Now let’s hop into the guide…

How is Crypto Taxed in Denmark

In Denmark, Skattestyrelsen classifies BTC and other crypto assets as personal assets rather than currency. Taxation of personal assets applies in two scenarios: when they are utilised for business purposes or when they are regarded as speculative as determined by the tax authorities.

The Danish tax authority considers crypto holdings to be speculative, resulting in taxable gains or losses. If there is uncertainty about how the tax authority views one's crypto holdings, individuals have the option to request an assessment to obtain clarity.

According to Skattestyrelsen, the tax treatment of crypto investments in Denmark is contingent on the specific nature of the transactions involved. 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%.

Example:

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.

Can the Skattestyrelsen Track Crypto?

Yes. The Skattestyrelsen can trace your crypto transactions from as far back as 2019. This was made possible through a collaboration between the Danish Tax Agency and crypto exchanges operating within Denmark, offering tax authorities access to KYC details of investors from all major exchanges. Moreover, the tax agency has taken action by sending 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 your crypto income to avoid any potential issues.

Crypto Gains Tax

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 circ*mstances:

If the assets are associated with your business
If it is considered a speculative asset

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.

Capital Gains Tax Rate Denmark

Denmark doesn’t have separate tax rates for short-term and long-term capital gains. All access capital is taxed under a variable tax rate that may go up to 42%.

How to Calculate Crypto Gains and Losses

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.

Example

Crypto Losses

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 circ*mstances under which you can write off your losses.

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 between those transactions.

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.

Lost or Stolen Crypto

As per 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.

Crypto Tax Breaks Denmark

Although the Danish tax authorities haven’t put out any dedicated tax-break programs for residents. Some existing laws allow you to reduce your tax bill to some extent.

Personal Tax Allowance: In Denmark, every individual taxpayer who is 18 years old or above is entitled to a tax-free personal allowance of 46,700 DKK. In situations where one spouse is unable to fully utilize their allowance, the unused portion may be transferred to their partner for tax purposes. This mechanism ensures that eligible taxpayers can maximize their tax benefits and optimize their overall tax liability.

HODLing Crypto for Non-Speculative Purposes: Under certain circ*mstances, it is possible to avoid paying tax on gains from cryptocurrency investments if the investments are not considered speculative. To determine whether your investments fall under this category, you can request an assessment from the Danish Tax Agency, which will evaluate your investments on an individual basis. This approach allows for a fair and personalised assessment of cryptocurrency investments that may result in tax savings for eligible investors.

Gifting Crypto: According to a previous ruling dated 13 Feb 2019 which sets the precedent for crypto gifts to be completely tax-free if they’re non-speculative and low value, you can gift up to DKK 69,500 for 2022 or DKK 68,700 for 2021 tax-free, but it will only be considered tax-free when you gift the assets to the following people:

Offsprings, step-children and their kids
Parents
The surviving spouse of a deceased child or a stepchild
Foster children who have lived with you for more than 5 years
Stepparents and grandchildren
Someone you’re living with for more than 2 years

Donating Crypto: Donating to a charity that has received approval from the Danish Tax Agency may qualify for a tax deduction. The maximum amount you can deduct from your taxes is DKK 17,200 in 2022 and DKK 17,000 in 2021, with the deduction rate set at 26%. To ensure that your donation is eligible for this deduction, it's crucial to confirm that the charity reports your gift to the Danish Tax Agency and provides them with your civil registration number (CPR-nr).

Crypto Cost Basis Method Denmark

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Crypto Income Tax Denmark

According to the Danish tax authorities, if you are involved in transactions with crypto assets resulting in gains, you will attract capital gains tax or income tax based on the nature of the transactions.

If you use Bitcoin and other altcoins for investment or trading, any gains will be considered income by the Danish tax authorities and subjected to income tax laws. It’s only when you use stablecoin as an investment instrument that the gains are taxed under the capital gains laws.

Income Tax Rate Denmark

The personal income tax rate in Denmark constitutes four discrete tax brackets:

Bottom-Bracket Tax

The flat rate of 12.11% bottom-bracket tax in Denmark for all income earners, with the caveat that it is calculated after the subtraction of their allowance and 8% labour market tax.

Top-Bracket Tax

Individuals earning above 552,500 DKK in Denmark are subject to the top tax bracket, which is an extra levy of 15% on their income. It is worth noting that this tax is computed after accounting for labour market contributions.

Municipal and Labour Market Tax

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 approximately 25%. Although crypto assets are exempt from the 8% market tax, understanding this tax remains crucial for devising effective tax planning approaches.

It is crucial to be aware of a regulation in Denmark that 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.

How to Calculate Crypto Income

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.

Tax-Free Crypto Transactions

Although most crypto transactions attract tax liabilities in Denmark, the Danish tax authority considers some transactions to be tax-free:

Buying crypto assets with Danish krone or any other fiat currency
HODLing crypto
Transferring crypto between your wallets
Donating crypto

Taxed Crypto Transactions

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:

Buying and selling cryptocurrencies for speculative purposes is considered taxable in Denmark. This includes both short-term and long-term trades.

Income generated from cryptocurrency mining is also considered taxable. If you receive cryptocurrency as a reward for mining, the value of the cryptocurrency received will be taxed as income.

Staking cryptocurrency involves holding cryptocurrency in a wallet to support the network and earn rewards. Therefore, staking is also a taxable transaction in Demark.

If you receive cryptocurrency as payment for goods or services, the value of the cryptocurrency received will be taxed as income.

If you receive cryptocurrency as a donation, the value of the cryptocurrency received will be taxed as income.

Tax On Mining Crypto in Denmark

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.

Tax on Staking Crypto in Denmark

In Denmark, staking rewards are considered personal income for tax purposes, which means they are subject to income tax liabilities. When reporting staking rewards on your tax return, you should include them in box 20.

However, according to a recent notification, staking rewards are taxable only when you have received the tokens and can utilize them. This update is particularly relevant for individuals involved in ETH staking, as your staking rewards will be taxable only when you can transact with them.

Moreover, any gains obtained from the sale or disposal of staking rewards will also be subject to taxation

Crypto Margin Trading, Futures, and CFDs

In a decision dated 3rd April 2018, by the Danish tax authorities concerning the speculative and leveraged trades of cryptocurrencies, margin trades were categorized as futures contracts entered for speculative purposes, as covered by section 29(1) of the Capital Gains Act.

According to the new ruling, the gains and losses incurred will be taxed separately for each contract, and the gain/loss calculations will be made 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. The gain/loss is the difference between the value of the contract at the beginning of the tax year and towards the end. Note that the losses incurred are tax deductible

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.

Crypto Gifts and Donation Taxes

According to a previous ruling by the Danish Tax Agency, it was determined that crypto gifts could potentially be exempt from taxes if they are considered speculative and hold a low value.

In Denmark, gifts are typically tax-free up to a maximum threshold of 69,500 DKK for the year 2022. However, this exemption is applicable only if the recipient is your child, stepchild, grandchild, parent, stepparent, or an individual with whom you have cohabitated for a minimum of two 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.

NFT Taxes Denmark

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.

ICO Taxes

Based on a previous ruling, it is mandated that Initial Coin Offerings (ICOs) should be considered assets and subject to taxation under the State Tax Act. As per the State Tax Act, speculative assets are treated as taxable income. Consequently, it is our understanding that individuals are required to report their gains and losses from ICO investments. This means that any profits obtained are taxed as income, exempt from labour market contributions, while any losses incurred can be deducted.

From a taxation perspective, the process is akin to a crypto-to-crypto trade, where you exchange your cryptocurrency for tokens from a new project, and the valuation is based on the local currency.

DAO Taxes

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.

Defi Crypto Taxes Denmark

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.

How are Airdrops and Forks Taxed in Denmark?

Forks

According to the latest ruling by the tax authorities, soft forks are non-taxable 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.

When to Report Crypto Taxes in Denmark?

In Denmark, the taxation cycle spans from the beginning of January to the end of December annually. Individuals must furnish their tax returns by the 1st of May each year to meet the legal obligation of tax reporting. For those with non-Danish income, the deadline extends to 1st of July. The reporting pertains to the 2022 financial year, and the due date for submission is the 1st of May 2023. Starting mid-March 2023, individuals may utilise the online portal, E-tax, to fulfil their tax reporting requirements.

How to File Crypto Taxes in Denmark?

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:

Gains from Bitcoin & altcoins-Box 20.
Losses from Bitcoin & altcoins-Box 58.
Gains from stablecoins-Box 346
Losses from stablecoins-Box 85
Airdrops-Box 20
Staking rewards (but only at the point you receive them in your portfolio)-Box 20
Mining rewards-Box 20
Other income as interest from crypto-Box 20.

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 Kryptos that can easily generate legally compliant tax reports in a matter of minutes by auto-fetching all your details from across your investment pool.

What Records Will the Skattestyrelsen Want?

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:

Detailed records of buy/sell transactions
E-mails with details of the trade sent by the exchanges
Details of your service providers(exchanges, wallets, blockchains)
Public keys of your wallets
Details on your existing portfolio
Bank statements to correlate with your buy/sell transactions
Receipts to prove expenses
Additional documentation of your purchases and sales is required to verify ownership.

How to File Crypto Taxes Using Kryptos?

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 Kryptos can make this task easier for you:

Visit Kryptos and sign up using your email or Google/Apple Account
Choose your country, currency, time zone, and accounting method
Import all your transactions from wallets and crypto exchanges
Choose your preferred report and click on generate report option on the left side of your screen and let Kryptos do all the accounting.
Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

How to Avoid Taxes on Cryptocurrency in Denmark

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.

HODL: If you are a long-term investor, you can hold your cryptocurrency for more than three years before selling it. In Denmark, capital gains from the sale of cryptocurrency held for more than three years are tax-exempt. So, if you hold your cryptocurrency for the long term, you can avoid paying taxes on capital gains.

Use Tax Deductions: In Denmark, you can deduct expenses related to your cryptocurrency transactions, such as transaction fees and exchange fees. Keeping track of these expenses can reduce your taxable income.

Take advantage of losses: If you sell cryptocurrency at a loss, you can use that loss to offset capital gains from other investments. This can reduce your tax liability.

You can refer to the section titled “Crypto Tax Breaks” for more details on this.

Frequently Asked Questions(FAQs)

1. Is crypto legal in Denmark?

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.

2. How is crypto taxed in Denmark?

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.

3. When do you need to report your crypto taxes?

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.

4. What do assets with speculative purposes mean?

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.

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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!