Getting Started with the Divly Optimizer
In this guide we explain how offsetting cryptocurrency capital gains and losses works in Sweden. We also explain how to use the Divly Optimizer as a tool to calculate different scenarios.
Updated: Aug. 2, 2022, 12:51 p.m.
If you are unsure on how taxes are calculated for crypto in Sweden and want to understand more before proceeding, you should first read our Swedish crypto tax guide. This guide provides an in-depth look at how crypto taxes work in Sweden.
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.
An introduction to tax loss harvesting in Sweden
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.
What is the Divly Optimizer?
The Divly Optimizer is a tool that can be used to calculate different crypto tax scenarios by offsetting capital gains and losses against each other. More precisely, the Divly Optimizer analyzes your realized and unrealized gains in different cryptocurrencies based on the transactions you have imported into Divly. If possible, the Divly Optimizer summarizes examples for one or more realizations that can be performed to minimize taxes payable in the current tax year.
The Divly Optimizer can be used until the 31st December to offset capital gains taxes for the current tax year. There are two scenarios where the Divly Optimizer can be utilized:
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If you have realized capital gains profits in the current tax year, and have unrealized crypto losses.
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If you have realized capital gains losses in the current tax year, and have unrealized crypto gains.
How to use the Divly Optimizer
Before you start, make sure your crypto portfolio is up to date in Divly. The Divly Optimizer bases its calculations on your historical deposits, withdrawals, and trades. If this information is incomplete or incorrect, the Divly Optimizer will not work as intended.
To get the right results, make sure your Divly account is up to date! It’s as the old saying goes - “garbage in, garbage out”.
Step 1: Understand how it works
After you have logged in to Divly, on the left sidebar click on Optimize. You will see a screen with 4 different steps. On the right hand side you will see a Capital Gains Summary.
The Capital Gains Summary is a dynamic component that updates anytime you add new transactions or edit existing transactions in Divly. The Capital Gains Summary will display any changes in results whilst you use the optimizer to simulate different scenarios.
After you have read and understood what the Divly Optimizer is used for you can click the button Continue to go to step 2. The Divly Optimizer feature is available to anyone who has purchased their Tax Report in Divly. If you have not paid for a Tax Report, then you will not be able to go to the next step.
Step 2: Understand the limitations
If you intend to use the results provided by the Divly Optimizer it’s important that you have read and understood the limitations. Once you are content that you have understood them, you can check the boxes and click Continue.
These limitations include:
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It is only adapted for the Swedish tax system.
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It is based on the transactions you have imported into your Divly account.
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Cryptocurrency capital gains are not isolated from other parts of your tax return (Inkomstdeklaration 1). The Divly Optimizer will attempt to take these into consideration but may fail to adequately cover all the scenarios.
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Cryptocurrency capital gains losses in Sweden are only deductible by 70%. You may prefer in the long run to not offset unrealized losses.
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The Divly Optimizer is a general use Do-It-Yourself tool that may contain flaws. You are responsible for how you choose to use and rely on the tool. We make no claims that it provides you with the correct results. Use it at your own risk.
Step 3: Optimize
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 currently 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 will be able to select the ones you are willing to utilize in the optimization process by checking or unchecking each respective box. Any time you check or uncheck a box, the Capital Gains Summary will update to the right. Feel free to experiment here to test different scenarios.
There are several reasons why someone would want to exclude a 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 does not want to move it out of 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 of 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.
Simply fill in the values according to what you expect to declare and click Update. If you are unsure what 7.1, 7.2 etc refer to, you can look them up here on Skatteverkets website. Please take note that the Divly Optimizer will not be able to calculate scenarios that involve 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 4: Capital gains before and after
Here you will see a table of the realizations required to achieve the current optimization. You will be presented with a list of assets that have either been unchanged, changed or are new. The green text represents changes the optimizer has used to alter the capital gains summary. The dark text sums up the realizations you have already made throughout the year and the new changes the optimizer has used.
We refer to a tax advisor or Skatteverket for further information about how to amend your final taxes payable due to the result of the net result. If and how to realize your unrealized gains or losses is up to you (whether you decide to sell or use another method).
Feedback
We are pleased to have released the beta version of the Divly Optimizer. We plan to continuously update and improve the tool going forwards. If there are iterations and improvements that you would like to see then please let us know by writing to us in our online chat. Thank you!
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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.