Guide to declaring crypto taxes in Denmark (2022)
Find out how to calculate and declare cryptocurrency taxes in Denmark.
Updated: Dec. 27, 2021, 4:11 p.m.
This article aims to serve as a complete guide on how to calculate and pay taxes on cryptocurrency (for example Bitcoin and Ethereum) for individuals in Denmark. Whether it’s your first time declaring taxes on cryptocurrencies or you are an experienced crypto evangelist, you should find this guide useful. In this guide we will be covering:
How cryptocurrencies are taxed
Detailed information about different transaction types
How to submit your tax report to Skat.dk
This guide will be updated and maintained on a regular basis to account for changes made by the local tax authority (Skattestyrelsen) and for new types of transactions. In the event that you find any errors or outdated information, it is greatly appreciated that you let us know by sending an email to firstname.lastname@example.org or via our support chat at the bottom right 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.
Important dates 2022
Mid-March 2022 - Starting in mid-march you can access and update your tax information via E-tax.
1 May 2022 - The deadline for updating and submitting your tax return if you are subject to full or limited tax liability.
1 July 2022 - The deadline for updating and submitting your tax return for any Non-danish income. Failure to adhere to the deadline can result in a daily fine of DKK 200.
November 2022 - You will receive a preliminary income assessment for the following year which will become available via E-tax. The tax year runs from the 1st of January to the 31st of December
How cryptocurrencies are taxed in Denmark
You might be surprised to find out you do not have to pay capital gains tax on your crypto holdings in Denmark. But don’t start cheering just yet. An increase in the value of an asset is not taxed in Denmark unless it is part of an individual’s business or is owned for speculative purposes. In general cryptocurrency, holdings are seen as speculative assets and so the profits and losses are taxable. It is generally sufficient that the intention of speculation was not insignificant at the time of acquisition. If you are unsure whether you own crypto for speculative reasons the Danish tax agency can make an overall assessment for you taking into account details such as the following - What cryptocurrency did you buy?
What can it be used for?
Is the cryptocurrency suited for speculation?
Is it possible to sell the cryptocurrency at a profit?
Are you the owner of the cryptocurrency?
Even if the original intention was not to hold a cryptocurrency for speculative purposes this does not preclude the profit motive of the asset. See for example SKM2021.569.SR regarding purchasing Dogecoin for the humorous elements involved.
If you are still unsure if you’ve purchased cryptocurrency for speculative intent you can have an assessment made for you here.
If you have earned crypto for some form of work or effort then you need to pay typical income taxes, just as you would have if you were paid in your local currency. You'll be liable for tax on your salary and other income, including interest income.
If you decide to keep the cryptocurrency that you received, then you will need to also pay income taxes on any profits or losses that are incurred when you sell them. The cost basis in this case would be equivalent to the value at the time you received the tokens.
You may have to take into account multiple types of income tax. In general income taxes are applied to your income after your tax-free amount and labor market contributions (LMC) of 8% tax rate have been deducted. Your personal allowance will depend on your situation but starts at DKK 46,700 for adults. You will have to pay state taxes on your income in the form of bottom-bracket tax and potentially top-bracket tax. You will also be subject to a municipal tax. Notably, most crypto income will not be taxed for the 8% labor market contribution unless it comes from income received from work as discussed further below.
Bottom-bracket tax is payable by anyone with an income. Bottom-bracket tax is calculated on what is referred to as your personal income, with the addition of positive net income from capital. In 2022 this tax rate is 12.10%. Bottom-bracket tax is calculated after an 8% labor market contribution and your personal allowance.
Top-bracket tax is a 15% tax on income over DKK 552,500 in 2022 (DKK 544,800 in 2021) after labor market contributions.
This varies based on your municipality, but the average municipal tax rate in 2021 was 25%.
The sum of your bottom-bracket tax, top-bracket tax, and municipal taxes cannot exceed 52.06% of your income. Take into account that this does not include church tax or labor market contributions.
The table below shows your tax rate after applying the labor market contributions. So for example, if you have an income of DKK 600543, then you pay labor market contributions of 8% on this amount. Leaving you with DKK 552500. From this you would subtract your personal allowance of DKK 46700 before calculating applicable taxes.
|Income after LMC (DKK)||Tax Rate Without LMC||Effective Tax Rate Without LMC||Effective Tax Rate Including LMC|
|46700-552500||37.1%, Lower Bracket Tax(12.1%)+Municipal Tax (~25%)||~0%-31.2%||~8%-39.2%|
|552500+||52.1%, Lower Bracket Tax (12.1%)+Top Bracket Tax (15%)+Municipal Tax (~25%)||~31.2%-52.06%||39.2%+|
Calculations are done based on a 25% municipal tax.
Reporting profits and losses
You should not calculate the net gains or losses on sales from cryptocurrencies bought in multiple transactions. Instead, you should report the gain or loss on each sale separately. If, however, you bought one coin and sell it in multiple transactions then you can calculate the net gain or loss of the sales. The reason for this is that you can determine exactly which coin you are selling, and so its cost basis.
Say you buy one Bitcoin for DKK 300,000. Assume you sell this bitcoin in two transactions. On your first sale you make a profit of DKK 20,000 and on the second sale a loss of DKK 10,000. Then you can calculate the net gain to be DKK 10,000 and enter this profit in Box 20 on your tax return. If instead, you make a loss you should report this in Box 58.
Say that between your sales transactions you buy another of the same cryptocurrency. Then for future sales, it is not directly clear which of your cryptocurrency coins you are selling. You can no longer calculate the net gains or losses of future transactions. Instead, you have to use the FIFO (First-in-First-Out) method to calculate your cost basis. The FIFO method implies that the first coin of the cryptocurrency you sell is the first one bought. You can use this to determine your profits and losses for each future trade individually. You must then report your gains for each transaction in Box 20 and losses on each transaction in Box 58. Divly can use the FIFO method for all of your transactions.
For example, assume you buy 1 Bitcoin for DKK 300,000 and then another Bitcoin for DKK 330,000. You proceed to sell half a Bitcoin for DKK 170,000. To calculate your profit or loss you should use the selling price minus the cost of acquisition of the bitcoin you’re selling. The cost basis you should use is DKK 150,000 because this corresponds to the acquisition price of the first Bitcoin you bought. Therefore, you’ve made a profit of DKK 20,000, which you must report in Box 20.
Furthermore, you should know that you also cannot calculate the net profit between different cryptocurrencies’ transactions. For example, if you have a gain on Ethereum and a loss on Bitcoin you must record each transactions’ gain or loss seperately.
Losses can result in a tax deduction of 30% while profits are taxed based on your personal income. This means that it may be possible to pay more taxes than you’ve earned in profits.
Say you’ve made a profit of DKK 1000 on an Ethereum trade as well as a loss of DK 900 on an Ethereum trade. Therefore you’ve made a profit of DKK 100. Your gains can be taxed at your income tax rate, say it is 50% for this example, then you pay a tax of DKK 500. You can deduct 30% of your losses of DKK 900, which is DKK 270. Therefore you must pay a DKK 230 tax on a profit of DKK 100.
Detailed information on different transaction types
Certain transactions trigger the taxation rules differently. Below is a master list for your reference, we will go through each in detail in this guide. Each transaction has an associated tax classification and the corresponding label in Divly for those using our service to automate their tax reporting.
|Transaction Type||Tax Classification||Divly Label|
|Sell crypto||Income Tax||Sell|
|Trade crypto for crypto||Income Tax||Traded crypto|
|Initial Coin Offering (ICO)||Income Tax||Traded crypto|
|Purchase goods & services with crypto||Income Tax||Goods/Services|
|Pay trading fee with crypto||Income Tax||*Fee Included in Trade|
|Pay transfer fee with crypto||Income Tax||*Fee Included in Transfer|
|Transfer crypto between your own wallets||None*||Transfer|
|Lost or stolen crypto||None||Lost/Stolen|
|Give crypto as a gift||Gift Tax*||Gifted Away|
|Receive crypto as a gift||Income Tax*||Received Gift|
|Income (e.g. freelancing, salary)||Income Tax||Income|
|Lend out Crypto||Income Tax||Interest Received|
|Borrowing Crypto||Income Tax||Interest Paid|
|Reward (e.g. referral)||Income Tax||Reward|
|Margin Trading||Income Tax*||Realized Profit/Loss|
|Futures / Derivatives Trading||Income Tax*||Realized Profit/Loss|
Buy Crypto / Buy Crypto with Fiat
There are no taxes involved when buying crypto. However, you need to ensure that you keep track of the price you paid for it for your cost basis calculation. If you purchased the crypto in a foreign currency (e.g. USD or EUR) make sure to convert it to the value in local currency on that day.
When buying crypto you can add the trading fee to the cost basis. This will help reduce your taxes. For example, you purchase 1 ETH for DKK 10,000 and pay a trading fee of DKK 100. Your cost basis for 1 ETH is DKK 10,000 + DKK 100 = DKK 10,100.
Sell Crypto / Sell Crypto for Fiat
Selling cryptocurrency will always require you to declare your profits and losses. Once again, it's important to calculate the selling price in local currency at the time of sale.
When selling crypto you can subtract the trading fee from the sale price. This will help reduce your taxes again. Let's continue with the previous example from above where we now sell 1 ETH for DKK 20,000 and pay a trading fee of 300 DKK. The profit for 1 ETH is 20,000 - 10,100 - 300 = DKK 9,600 . If you are using Divly, all the fees are automated in the calculations.
Trade Crypto for Crypto
In Denmark, trading crypto for crypto is a personal income tax event. You must pay tax on the cryptocurrency you sold. The value is based on the cryptocurrency that you sold it for, in your local currency. For example, if you sold 1 BTC for 10 ETH, then the selling price is the value of 10 ETH in DKK.
Finally, you need to account for the cost basis of the Ethereum that you purchased. This is the same as the value above, 10 ETH in DKK on the day of the trade.
Initial Coin Offering (ICO)
An ICO is when you invest your crypto (usually Ethereum) in a new project that in turn provides you a token that represents that project.
According to SKM2021.291.SR ICOs must be considered as assets and are taxed according to the State Tax Act. By The State Tax Act § 5, para. 1, letter a, speculative assets are taxed as Income. In our opinion, this implies that you have to declare your gains and losses on ICO investments. Hereby your gains are taxed as income not subject to labor market contributions and your losses are deductible. From a taxation point of view, it functions the same as a crypto to crypto trade. Essentially, you send cryptocurrency in exchange for a token from a new project.
You follow the same principle where you sell your crypto for the value of the ICO token in local currency.
Purchase Goods & Services with Crypto
When you purchase a good (e.g. new computer, amazon gift card) or pay for a service online (e.g. VPN service), then you must pay income tax on the crypto you spent. This works the same as selling crypto for fiat, the selling price is what the good or service costs in your local currency.
Pay Trading Fees in Crypto
On some exchanges, typically when you trade crypto for crypto, the trading fee will be paid in crypto. In these cases, you need to convert the crypto you used to pay for the trading fee into your local currency and then pay income tax on it.
Trading fees also contribute to the cost basis for the purchased cryptocurrency.
Pay Transfer Fees in Crypto
When you pay transfer fees in crypto you have to pay income tax on the crypto used to pay the fees.
Transfer Crypto Between Your Own Wallets
Transferring crypto between your own wallets is not a taxable event (this includes sending crypto to your account on an exchange). It is important that you track these transfers properly so you don't pay unnecessary taxes!
Lost or Stolen Crypto
If you lose access to your crypto wallets this does not allow for a tax deduction according to the Danish Tax Authority’s ruling in SKM2018.104.SR. Having lost access to the wallet key does not imply a loss of ownership over the asset and so it is not tax-deductible. It may however be possible to deduct a loss on stolen crypto. Should you want clarification or believe that your situation is different you can apply for a binding assessment here.
Give Crypto as a Gift / Receive Crypto as a Gift
There is a precedent that a crypto gift can be completely tax-free as in SKM2019.78.SR where the gift was considered to be non-speculative and of low value. However, in many situations, you will have to end up paying taxes on your gifts.
Gifts can be tax-free up to a value of DKK 69,500 for 2022 or DKK 68,700 for 2021 to the following persons - Offspring, stepchildren and their offspring
The surviving spouse of the deceased child or stepchild
Foster children who have lived with the gifter for 5+ years
Stepparents & grandchildren
Persons who have been jointly resident with the donor for the last 2 years prior to receipt of the gift.
For gifts to daughters-in-law and sons-in-law the tax free amount is DKK 24,000 (2022) or DKK 23500 (2021).
For any value above this amount you have to pay 15% in tax. For gifts of that value the donor and recipient must submit a notification of the gift and its taxable value to the customs and tax administration no later than the 1st of May of the following year. The value of the gift is determined by its market value at the time the recipient received the gift.
Ordinary gifts that you receive of modest value from people not on the list above can be tax free for special occasions such as Christmas or birthdays. There are no precise rules for what constitutes a modest value however. But if the value is greater than generally acceptable then you must fill in the value of your gift in box 20 (field 250 on the advance statement). If you are unsure about your situation it is recommended that you contact the Danish Tax Authority. Their number is located in the How to submit your tax report to Skat.dk section below.
You can read more about the gift tax here. There you can calculate exactly how much gift tax you owe. You will also find a digital form which you should use when paying gift taxes.
You can get a tax deduction for donations to a Danish Tax Agency approved charity. You should automatically receive the deduction if you’ve given the charity your civil registration number. You can deduct maximally DKK 17,200 in 2022 and DKK 17,000 in 2021. The deduction is 26%
The approved association must report your gift to the Danish Tax Agency so make sure to provide them with your civil registration number (cpr-nr). You should then automatically receive a deduction
There are no concrete regulations on airdrops at the moment. Until the Danish Tax Authority publishes more information or rulings on airdrops we can only make assumptions regarding the characteristics of airdrops and how they relate to taxation. An airdrop is typically considered as a gift from the token holder or blockchain. Airdrops are usually a very small or negligible amount. Usually, these are given as a promotional tool for new currencies. Promotional gifts are liable for income taxes if their value is not negligible. However, there is no clear information on when the value is negligible.
A hard fork is typically considered as a gift from the new blockchain fork. In a previous ruling on the disposal of cryptocurrencies, the Danish Tax Authority also covered hard forks. Their conclusion was that taxes only had to be paid upon disposal of the asset. You should use DKK 0 as the cost basis.
The Tax Council found that activity relating to the mining of bitcoins constituted a hobby business and that the remuneration for ceded mined bitcoins should be included as business income in the hobby business (hobbyvirksomhed)
You need to declare profits from non-commercial businesses in box 20 in your tax assessment notice. Under other personal income.
Skattestyrelsen does not provide information on taxes for staking. In a request by Jesper from Dansk Krypto Nyt, the Danis Tax Authority responded with the following
“In this case, the decisive factor in qualifying the taxation is whether the return received in the tax legislation can be defined as an actual interest rate or not. The Danish Tax Agency states that crypto received as a reward/ interest by simply keeping the underlying cryptocurrency, can not be considered as interest in the tax sense. That is, you are not liable for tax on the value of the crypto received upon staking. As a result, you will only be liable to tax on any profits on the day you sell the received crypto. “
Therefore, we do not believe you should pay income tax on staking rewards. You should only pay tax on the profits once you sell your crypto.
Lending Your Crypto
Although there are no regulations specifically regarding crypto lending we can look at general regulations regarding lending. If there is a guaranteed interest rate set out prior to entering a lending agreement then this return constitutes interest income.
For individuals, interest income is generally taxed as capital income (kapitalindkomst). Although there are no specific rules regarding crypto lending we are of the opinion that box 31 should be used to declare your interest revenue.
Although there are no regulations specifically regarding borrowing crypto, we can look at general regulations regarding borrowing. In certain situations, you can deduct interest expenses. For interest expenses to be deductible, there must be a loan agreement that contains both a legally binding obligation to pay the debt and interest on the debt. Interest expense cannot be deducted in the following situations.
Cannot be deducted:
Interest on taxes, fees, loans for property taxes
Loans against security in life insurance policies
Debt to living heirs, etc., which is a gift or inheritance
Think for example of sharing a post or referring a friend to a service. Any crypto you receive for these actions is subject to income tax. You need to report the value of the reward in DKK at the time you acquired the reward. You need to state the value in Box 20 of your annual statement (field 250 of the advance statement).
Gambling winnings may also be taxed in Box 20. This is the case if you win in a game or lottery that is not approved by the Danish government.
Income From Other Activities (e.g. freelancing, salary)
Freelancing work should primarily be placed on your b-kort. This is the card used for secondary income sources. To calculate your taxes from the b-kort first deduct 8% for labor market contributions. Then multiply the remaining amount by your withholding rate. You can find your withholding rate on your preliminary income assessment. This remaining amount in addition to the 8% labor market contributions is the tax you’ll have to pay.
If your B-income is fixed you can fill it into our Box 210 of your preliminary income assessment. If instead, it is a small amount or a lump sum the easiest way to pay taxes over it is to fill in the form here.
Margin trading, Futures, and Derivatives trading
In the decision SKM2018.130.SR about speculative trades and margin trading of cryptocurrencies, the Danish Tax Authority ruled that margin trading constituted that the margin trades in question must be regarded as futures contracts entered into for speculative purposes. Such contracts are covered by section 29 (1) of the Capital Gains Act. 1.
Therefore, gains on financial contracts must be included under taxable income. Namely, capital income in the Personal Income Tax Act § 4.
Following this gains and losses are taxed separately for each contract, so for each margin trade. However, with these financial contracts, the gains and losses are calculated on a rolling basis. Therefore regardless of if a gain or loss is realized by the end of the income year, you still must report the gain or loss on the contract. The gain or loss is the difference between the contract’s value at the end of the income year relative to its value at the beginning of the income year.
If the contract was instead entered during the income year then gains and losses are calculated as the difference between the value at the end of the income year relative to the acquisition price.
How to submit your tax report to Skat.dk
Once all the tax calculations are done and Skat.dk’s tax portal is open, it is time to declare your taxes before the deadline in May. You can submit your taxes online or by mail. We will primarily focus on the online portal in this guide. Should you have any questions you can always call Skat.dk for free at (+45) 72 22 27 95 during working hours.
In March the online E-Tax portal will open up with your tax assessment notice. Here you can see how much taxes the state has determined you should pay. If you need to update any information you can do so before the 1st of May. If you need to change information after the 1st of May you need to contact Skat.dk and provide them an explanation as to why you need it reopened.
There are a couple of things you need before you can access the E-tax Portal
Civil Registration Number
You can find your E-tax password on the top right of your tax return
Then go to www.skat.dk/tastselv and click Adgang med TastSelv-kode (Access with TastSelv-code).
Then fill in your civil registration number and E-tax password, and click fortsæt.
If this is your first time logging in you will be asked to change the password. You must fill in your new password twice and then click fortsæt. If you want to update any information in your tax assessment you can click on Ændre årsopgørelsen (change your annual statement).
Here you will have the opportunity to fill in any information you need.
For cryptocurrencies, you can enter your profits in Box 20 of your tax assessment notice and your loss in box 58 of your tax assessment notice, respectively. Box 20 is for Other personal income not subject to labor market contributions, Box 58 is for Other employment-related expenses.
There is no limit to how often you can update your tax information as long as you get it done before the 1st of May.
Automate your crypto taxes with Divly
An easy way to save time is by using automation services like Divly. Divly does all the calculations for you so you can spend more time on other things in life.