EN
With the markets taking a steep dive this year, it can be good to understand how crypto losses are taxed. By declaring losses you can offset your gains or even receive tax breaks. We hope that this guide will help make you a better crypto trader in Sweden.
Note: This guide will focus specifically on crypto losses. If you want to understand the basics of crypto taxation in Sweden, you can read Divly’s Swedish crypto tax guide.
Should you declare crypto losses to Skatteverket?
You should always declare your crypto losses to Skatteverket. In fact, it is in your interest to do so. You can offset 70% of your losses against crypto or other asset profits like stocks. If you have a deficit (SV: underskott), you can even reduce your income tax.
It’s a criminal offense not to declare taxes in Sweden. So whenever you have made profits or losses, always make sure to declare them! If you have missed previous years, you can rectify it without being penalized by voluntarily submitting a självrattelse.
We will cover a wide range of scenarios in this guide that explain the mentioned tax benefits with specific examples.
Can you carry forward crypto losses for future tax years?
You cannot offset losses against profits from previous or future tax years. You can only use your crypto losses to offset taxes in the year you incurred them.
Since crypto experiences high volatility, it is not uncommon for people to have significant gains in one year and significant losses in another. Unfortunately, you can’t offset gains and losses between different years.
The potential workaround is to conduct your trading through a limited company in Sweden (Aktiebolag). However, this has other pros and cons, such as an increased administrative burden. Make sure to speak to a financial professional before restructuring in such a manner.
When should you calculate your crypto losses?
The deadline for declaring your taxes in Sweden is in May, slightly over four months after the tax year ends. However, you should stay up to date with your profits and losses throughout the year. You can use this information strategically to help minimize your taxes.
We will explore how calculating unrealized crypto gains and losses can provide ideas for improving your tax situation.
How do crypto losses lower your taxes?
There are multiple ways crypto losses can affect your taxes. It can decrease your capital gains taxes, interest income taxes, and even income taxes in some cases. It can be complex to calculate and track, but by using tax calculators like Divly, it can become a lot more manageable.
To best demonstrate how crypto losses work, let’s follow our imaginary friend Sam Brokeman as he deals with these different scenarios:
-
You have both crypto trading losses and profits
-
You have crypto trading losses, staking rewards, and/or crypto interest
-
You have crypto trading losses and profits in other assets
-
You have both crypto trading profits and losses in other assets
-
You only have crypto trading losses (deficit)
This is by no means a complete and exhaustive list of different tax cases, but it can be used to explain some of the most common scenarios when dealing with crypto taxes.
1 - You have both crypto trading losses and profits
Crypto trading losses can be used to offset 70% of your crypto profits for tax purposes. Therefore, for every 10 SEK of losses, you can deduct 7 SEK from your crypto profits when calculating your taxes.
Let’s see how this works out for our imaginary friend Sam Brokeman in 2022!
Sam sold Bitcoin (BTC) and made 1,000 SEK profit throughout 2022. Sam also sold FTT and lost 500 SEK in 2022. Sam didn’t sell any other cryptocurrencies. This is how Sam’s taxes would be calculated in Sweden.
Total losses: 500 SEK
Total taxable profit: 650 SEK = 1,000 - (500 x 70%)
Total taxes: 195 SEK = 650 x 30%
Sam has to pay 195 SEK in taxes since the tax rate on crypto profits in Sweden is 30%. By declaring his losses, Sam was able to reduce his total taxes.
But wait! Since 2022 has yet to end, Sam could, in fact, lower his taxes more!
That is because Sam was holding on to Solana (SOL), which had decreased in value since he purchased it. If Sam sold all his SOL, he would make a loss of 600 SEK. Sam decides to sell his Solana, but buys it back at the same price because he still believes in it. This is how his taxes look now for 2022:
Total losses: 1,100 SEK = 500 + 600
Total taxable profit: 230 SEK = 1,000 - (1,100 x 70%)
Total taxes: 69 SEK = 230 x 30%
Since Sam sold his SOL at a loss, he was able to reduce his taxes from 195 SEK down to 69 SEK. This is also known as tax loss harvesting and is a method sophisticated traders use to reduce their tax liability.
In Divly, you can use the Divly optimizer to make these types of calculations using the assets in your own portfolio. This can help you make informed decisions on what to sell and buy.
Please speak to a financial advisor for recommendations on what and how to sell your assets.
2- You have crypto trading losses, staking rewards and/or crypto interest
Staking rewards and crypto interest are subject to a 30% interest income tax in Sweden (SV: ränteinkomst). If you have accumulated staking rewards or interest in the form of crypto, you can use 70% of your crypto losses to offset the interest income tax.
In 2021 Sam Brokeman earned 500 SEK of ETH from staking throughout the year. He also made 500 SEK from an interest-bearing account that he received in USDC. All the staking rewards and interest were valued in SEK on the day he received them.
Total losses: 0 SEK
Total taxable profit: 1,000 SEK
Total taxes: 300 SEK** = 1,000 x 30%
Sam would have to pay 300 SEK on his staking rewards and interest income throughout 2021. However, Sam also made a loss of 1,300 SEK by selling ETH at a lower price. Therefore, his tax calculations now look like this:
Total losses: 1,300 SEK
Total taxable profit: 90 SEK = 1,000 - (1,300 x 70%)
Total taxes: 27 SEK** = 90 x 30%
Sam now only has to pay 27 SEK in taxes since he sold ETH at a loss and declared it.
3 - You have crypto trading losses and profits in other assets
70% of your crypto losses can be used to offset gains from section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, and 11.1 in your Swedish tax declaration. This means that crypto losses can be used to reduce other types of taxes from different assets.
These assets include (in Swedish):
7.1 Schablonintäkter 7.2 Ränteinkomster, utdelningar m.m. 7.3 Överskott vid uthyrning av privatbostad 7.4 Vinst fondandelar m.m. 7.5 Vinst ej marknadsnoterade fonddelar m.m. 7.6 Vinst från försäljning av fastighet eller bostadsrätt 7.7 Vinst från försäljning av näringsfastighet eller näringsbostadsrätt 11.1 Positiv räntefördelning
Let’s take a look at Sam Brokeman's tax situation in 2020.
In 2020, Sam made a loss of 5,000 SEK in XRP. Sam also made 10,000 SEK in profits from stocks that are a part of section 7.4 in the Swedish tax declaration.
Total losses: 5,000 SEK
Total taxable profit: 6,500 SEK = 10,000 - (5,000 x 70%)
Total taxes: 1,950 SEK = 6,500 x 30%
Sam was able to use his crypto losses to lower the taxes he realized on his stocks. He could have used his crypto losses to reduce taxes for any combination of all the sections listed above as well.
If you are using the Divly Optimizer, you can simulate profits in these sections in the advanced settings.
That allows you to see how your crypto profits and losses affect your taxes across asset classes.
4 - You have both crypto trading profits and losses in other assets
You can use other assets’ gains to lower your crypto tax. Your crypto capital gains tax can be reduced by 70% by offsetting it with losses from sections 8.1, 8.2, 8.3, 8.4, 8.7, and 11.2. Reduced by 63% from losses in section 8.6 and by 50% from losses in section 8.5.
These assets include (in Swedish):
8.1 Ränteutgifter m.m. 8.2 Förvaltningsutgifter 8.3 Förlust fondandelar m.m (includes stocks) 8.4 Förlust ej marknadsnoterade fondandelar m.m. 8.5 Förlust från försäljning av fastighet eller bostadsrätt (50% reduction) 8.6 Förlust från försäljning av näringsfastighet eller näringsbostadsrätt (63%) 8.7 Investeraravdrag 11.2 Negativ räntefördelning
Sam had a good year and made 15,000 SEK selling FTT at a higher price to other traders. At the same time, his stock portfolio took a 10,000 SEK loss. Let’s see how this affects his taxes.
Total losses: 10,000 SEK
Total taxable profit: 8,000 SEK** = 15,000 - (10,000 x 70%)
Total taxes: 2,400 SEK = 8,000 x 30%
Sam was able to use his stock losses to lower his crypto taxes.
5 - You only have crypto trading losses
In Sweden, losses that exceed the income from your capital gains is called a deficit (sv. Underskott). A deficit up to 100,000 SEK can grant a tax reduction of 30% from your state and municipal tax (your salary tax). Deficits over 100,000 SEK can be granted a 21% tax reduction.
This is why even if you only suffered crypto losses for a specific year, you should still declare them! You can effectively use them to reduce the taxes you pay on your income.
Let’s see how this worked out for Sam Brokeman in one of his tax years.
Sam made a loss of 150,000 SEK by selling FTT at a lower price than he purchased them for. Sam also got paid a salary by his employer, over which he paid state and municipal taxes of 200,000 SEK during the year. Sam made no other profits from crypto or other assets during the year.
Total profits: 0 SEK
Total losses: 150,000 SE
Deficit (Underskott av kapital): 105,000 SEK (150,000 x 70%)
Total tax deduction from deficit: 31,050 SEK (100,000 x 30% + 5,000 x 21%)
Because Sam declared his crypto losses, he was able to use his deficit to reduce his income tax by 31,050 SEK. This is very relevant for many people who have seen large portfolio decreases during the 2022 down market.
The Divly Optimizer does not take into account state and municipal taxes since the tax rates differ based on the municipality you live in. This makes it difficult to calculate the tax effects of declaring a deficit. We may add support for this advanced option in the future.
How to use the Divly Optimizer to test different tax scenarios
The Divly Optimizer is a tool that can be used to calculate different tax scenarios by offsetting capital gains and losses against each other. As a bonus, it is available to anyone who has purchased a tax report for that year.
This is how you start using the optimizer.
Step 1: Make sure your crypto portfolio is up to date in Divly
The first and most important step of using the Divly Optimizer (and using Divly in general) is ensuring that you have imported all your crypto transactions to Divly. The Divly Optimizer bases its calculations on your historical trades. The Divly Optimizer will not work as intended if this information is incomplete or incorrect.
Step 2: Select what crypto to use in your optimizations
On this page, you will see a table of cryptocurrencies you currently hold. For each crypto, you will see the amount you have available and whether there is presently an unrealized gain or loss. An unrealized gain will be represented by a positive value, and an unrealized loss will be represented by a negative value.
Unrealized gain or loss simply means that if you were to realize your gains/losses (for example, by selling your crypto), then this amount would be added to your capital gains tax calculation. If and how you choose to realize your crypto is completely up to you. If you are unsure about what suits you best, feel free to seek professional advice.
On the left side of the table, you can select the currencies you are willing to utilize in the optimization process by checking or unchecking each box. The Capital Gains Summary will update whenever you check or uncheck a box. Feel free to experiment here to test different scenarios.
There are several reasons why someone would want to exclude specific crypto in the optimization process. This could include the fact that the crypto is currently inaccessible due to having them locked up for staking or simply that the person wants to keep it in cold storage. It is up to the user to decide which crypto they want to include in the optimization process. The Divly Optimizer allows for this flexibility.
Further down on the same page, you will find an expandable section called Advanced Optimization. Currently, the Capital Gains Summary has only calculated your crypto gains and losses in isolation from the remainder of your tax return. If you want to test it against other parts of the individual tax return, you can use this section to simulate these tests.
Fill in the values according to what you expect to declare. If you need clarification on what 7.1, 7.2, etc, refer to, you can look them up here on Skatteverket’s website. Please note that the Divly Optimizer will not be able to calculate scenarios involving a tax rebate in cases where there is a capital gains deficit (in Swedish, this is called “underskott”).
Once you are ready, you can click “Continue” to proceed to the final step.
Step 3: See the results of your optimizations
Here you can see what disposals Divly has calculated that need to be made in order to reach the intended tax effect. Whether you choose to act on these calculations or not is completely up to you.
You can keep iterating and testing to see how selecting different currencies will change your tax effect. Feel free to play around with it as much as you want.
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.
