This article is written for Swedish tax payers that want to use legal and sound means to ensure that they avoid overpaying on taxes when dealing with cryptocurrencies. Taxes have an important part to play in society but you should not need to pay more than you are expected to.
Nov. 15, 2022, 4:12 p.m.
This article will not discuss methods to reduce crypto taxes by relocating internationally. Neither will this article explore methods to escape taxation which is a criminal offense.
If you think that we are missing some useful tips that could help fellow crypto enthusiasts, feel free to let us know and we will append it. You can contact us through our online chat in the bottom right hand corner of our website.
Any tax-related information provided by us is not tax advice, financial advice, accounting advice or legal advice and cannot be used by you or any other party for the purpose of avoiding tax penalties. You should seek the advice of a tax professional regarding your particular circumstances. We make no claims, promises, or warranties about the accuracy of the information provided herein. Everything included herein is our opinion and not a statement of fact.
When buying crypto you can add the trading fee to the cost basis (44 kap. 14 § IL). This will help reduce your taxes. For example, you purchase 1 ETH for 10 000 SEK and pay a trading fee of 100 SEK. Your cost basis for 1 ETH is 10 000 + 100 = 10 100 SEK.
When selling crypto you can subtract the trading fee from the sale price (44 kap. 13 § IL). This will help reduce your taxes again. Let's continue with the previous example from above where we now sell 1 ETH for 20 000 SEK and pay a trading fee of 300 SEK. The profit for 1 ETH is 20 000 - 10 100 - 300 = 9 600 SEK.
Accounting for trading fees is especially important if you are running a trading bot or have a large amount of transactions!
Capital gains tax on crypto is calculated using the Average Cost Basis method (In Swedish: Genomsnittsmetoden). To correctly calculate gains, you need to figure out your cost basis (In Swedish: Omkostnadsbelopp). Price you sold for - cost basis = profit or loss. If you have used Divly then all of this will be automatically taken care of!
You pay 30% taxes on the profits you make. However, 70% of the capital losses can be deducted from capital gains. You can use this rule to lower your crypto taxes at the end of the year. This is known as tax loss harvesting and is commonly used by professional traders to minimize their tax liability.
For example, assume you have already realized a profit of 700 SEK in the current tax year. You have one altcoin that has done poorly and if you were to sell it you would make a loss of 1000 SEK. If you sell it before the end of the year you can realize that loss which means your capital gains would be 700 - (1000 * 70%) = 0 SEK.
Just because you failed to make a profit from crypto should not be a reason to avoid declaring it to Skatteverket. In fact, 70% of your crypto losses can be used to offset other capital gains you made from other asset classes. These include income from sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, and 11.1. You can find more information about these sections on Skatteverket’s website.
If you still have a net negative after considering all the above sections, you should still declare your crypto losses. These will be considered to create a deficit (In Swedish: “underskott”). If you have a deficit of less than 100,000 SEK, 30% of it can be used to offset the state tax and municipal tax you are liable to pay. For deficits over 100,000 SEK, a rate of 21% applies.
Note that you can’t offset losses from previous years, so make sure to utilize them in their respective tax year.
Declaring mining income can incur high taxes as it is treated as Income Tax (not capital gains tax). This means that you need to pay your marginal tax rate plus social contributions tax. Mining can also be costly to operate since you need to pay for both hardware and electricity.
However, if you can reasonably prove that certain expenses should be attributed to your mining operations, then you can lower your mining taxes. In fact, if your mining income is lower than your mining expenses, you don’t need to declare your mining activity at all! This means you don’t need to fill out a T2 form.
Take note that you need to be able to make a clear case that your expenses can solely be attributed to mining. Using your gaming PC as a mining expense will probably not be accepted by Skatteverket. You can read more in our mining tax guide for Swedish citizens.
If you are the lucky recipient of a gift in the form of crypto, make sure to ask for the receipt or transaction history. This is because when you receive a gift, you simultaneously inherit the cost basis. When you eventually dispose of the crypto you received, the cost basis will allow you to reduce your reported profits and hence lower the amount of taxes you are liable to pay.
It is quite common that people earn interest from lending out crypto. This is declared in section 7.2 when completing your tax return in Sweden. The same applies to staking rewards that are also declared in section 7.2 in the same manner.
What many people don’t know is that you can offset your interest received and staking rewards by declaring any interest you paid for taking loans. This is offset by the full 100%, unlike trading losses related to crypto which can only be offset by 70%. You submit interest paid in section 8.1 when completing your tax return for Skatteverket.
If you only buy crypto and don’t dispose of it, then you won’t need to calculate or pay taxes. Beware though that a crypto to crypto trades is a taxable event. The same goes for lending out crypto among other forms of transactions. You can read more about how different crypto transaction types are taxed in Sweden in our comprehensive guide.
In Sweden there is another unique option which involves purchasing an Exchange Traded Note (ETN) that tracks the price of Bitcoin or other select cryptocurrencies. It has its own drawbacks which I won’t go into detail with here. However, the main benefit is that you can place it in an ISK which means you don’t pay capital gains taxes on your profits. Instead you pay a set amount of taxes based on the total amount you own. This can amount to a lot less in taxes if you have large gains.
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