Danish cryptocurrency traders have recently gotten letters from the Danish tax agency, Skattestyrelsen (“Skat”). This comes as Denmark initiates a tax crackdown on cryptocurrency traders.
Danish tax agency could crack down on cryptocurrency traders
Moreover, this means that Danish cryptocurrency trading citizens will have to share their full cryptocurrency transactions with the nation’s tax authority. This news first came after the Danish tax agency sent out letters to Danish cryptocurrency traders.
Additionally, the Danish tax authority got approval for collecting information regarding cryptocurrency traders earlier this year. This data came from three local cryptocurrency exchanges, and includes the details of around 20,000 cryptocurrency traders.
Now, it would appear that the Danish tax authority is leveraging this information. In the last two weeks, Skattestyrelsen have sent out warning letters to these cryptocurrency investors urging them to amend their tax reports before the 15th of December, or face penalties.
This comes as Denmark is trying to avoid being seen as a safe haven for cryptocurrency taxes. Furthermore, the Danish tax authority’s decision follows similar decisions all over the globe. For example, the US tax authority, the IRS, has previously sent out similar letters.
This could be a sign of things to come in other countries
Robin Singh, the founder of the Swedish cryptocurrency tax startup Koinly, also went on record noting these recent letters sent to Danish crypto investors. He notes that requesting that investors showcase their full cryptocurrency transactions is a challenging task for cryptocurrency holders.
“Many of our Danish users have received these letters, Skat is asking for a full breakdown of all their transactions and asking them to fix all past reports as well. Filing tax on cryptocurrency trades is a difficult task as crypto traders usually hold several exchange accounts & wallets and freely transfer crypto between them, so there’s no easy way to figure out what the capital gains are for any particular trade.”
Specifically, the letters sent out request information about profits and losses for the fiscal years of 2016 to 2018. Furthermore, Skattestyrelsen requests users to report the changes using FIFO (first in first out) principles.
This new development comes as tax authorities around the world are gearing up towards tackling the issue of cryptocurrency taxation.
Although this is, for now, an issue for cryptocurrency users in Denmark, it could be an important gauge of what’s to come in other countries. Additionally, this also highlights the importance for cryptocurrency traders to keep track of potential gains and losses.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.