Are you a Norwegian taxpayer who has invested in cryptocurrency? If so, you may be wondering how to properly report your cryptocurrency income on your tax return. Don't worry, you're not alone! Many people are unsure of how to handle their cryptocurrency taxes, but with a little bit of knowledge and guidance, it can be fairly straightforward. In this article, we'll provide an overview of the tax rules for cryptocurrency in Norway and offer some tips to help you navigate the process. So, if you're ready to get a handle on your cryptocurrency taxes, let's get started!
We’ll be covering the following topics
Important Dates to know
How cryptocurrencies are taxed in Norway
Tax treatment of varying crypto transaction types
How to calculate your own cryptocurrency taxes
How to declare your cryptocurrency taxes to Skatteetaten
Important dates 2023
Between the 14th and 31st of March you’ll receive a notification via email with your preliminary tax return. Generally the deadline for updating and submitting your tax return is 30 April, however because that falls on a Sunday this year the deadline will be on 2 May. It is important to ensure that your tax return is completed and submitted by this deadline in order to avoid any potential penalties.
How cryptocurrencies are taxed in Norway
Any gains or income you make from cryptocurrency transactions are subject to a 22% capital income tax. Additionally, Your net wealth, including cryptocurrency holdings is subject to a wealth tax.
Wealth Tax (Formuesskatt)
In Norway, your net wealth at the turn of the year determines the amount of wealth tax you have to pay to your municipality and the state. You are taxed on your wealth exceeding 1,700,000 kroner. You can find up to date wealth tax rates at Skatteetaten Wealth in the form of cryptocurrency must be declared on your tax returns. You’ll have to trace back the value of each of your holdings to the turn of the year. This is made more difficult if you’ve made a number of trades since and have to find out exactly what you held at the start of the new year. Many exchanges do provide you with a graph on which you can find your holdings on that exchange at the start of the year. However, finding this information is more difficult if you’ve used a digital wallet or participate in defi transactions.
It is always prudent to check on January 1st what your holdings on all the platforms on which you have crypto. Alternatively you can track your cryptocurrencies on a crypto tax calculator made for Norway, such as Divly.
Capital Income (kapitalinntekt)
Did you know that any time you sell, exchange, or use Bitcoin or other cryptocurrencies to purchase goods or services, you may be required to report it as a capital gain on your taxes? Many people assume they only have to pay taxes when they sell their crypto for a fiat currency such as NOK. This is not the case. In fact the following long list of transactions are all taxable
Exchanging a cryptocurrency for one or more types of cryptocurrencies
Exchanging a cryptocurrency for a fiat currency (e.g. USD or NOK)
Purchasing goods/services with cryptocurrencies
Making, purchasing or selling NFTs
Sending crypto to a liquidity pool
Remember, it's important to report and pay capital income tax on your cryptocurrency transactions to ensure that you are in compliance with the law. Failure to do so could result in penalties and fines.
Calculating your capital income can be complex. You’ll have to determine by how much your cryptocurrency increased in value since you acquired them. The cost of acquiring the cryptocurrency, including any fees you paid, is known as the acquisition cost.
If you have acquired the cryptocurrency through multiple transactions, it may be difficult to determine which specific units you are selling, which can affect your profits. In Norway, there are several methods you can use to determine which cryptocurrency you are selling, including the FIFO (First-In-First-Out), LIFO (Last-In-First-Out), and HIFO (Highest-In-First-Out) methods.
The FIFO method assumes that you are selling the cryptocurrency units that you acquired first. The LIFO method assumes that you are selling the units you most recently acquired. The HIFO method assumes that you are selling the units with the highest acquisition costs. These methods are used to determine which specific units of cryptocurrency are being sold when calculating profits or losses.
Imagine that you own 1.5 bitcoin and you have acquired it through three separate transactions:
Transaction 1: You bought 0.5 bitcoin at a price of kr 100,000.
Transaction 2: You bought 0.5 bitcoin at a price of kr 150,000.
Transaction 3: You bought 0.5 bitcoin at a price of kr 120,000.
Now, let's say that you decide to sell 0.5 bitcoin at a current price of kr200,000.
Under the FIFO method, it would be assumed that you are selling the 0.5 bitcoin that you bought in Transaction 1, since it was the first one you acquired. This means that your profit would be calculated as follows:
Sale price : kr 200,000
Acquisition cost : kr 100,000
Profit : kr 100,000
Under the LIFO method, it would be assumed that you are selling the 0.5 bitcoin that you bought in Transaction 3, since it was the most recently acquired. This means that your profit would be calculated as follows:
Sale price : kr 200,000
Acquisition cost : kr 120,000
Profit : kr 80,000
Under the HIFO method, it would be assumed that you are selling the 0.5 bitcoin that you bought in Transaction 2, since it had the highest acquisition cost. This means that your profit would be calculated as follows:
Sale price : kr 200,000
Acquisition cost : kr 150,000
Profit : kr 50,000
As you can see, the method you choose can significantly affect your profits or losses when calculating your capital income from cryptocurrency transactions. It is important to understand the different methods and choose the one that best fits your situation. ‘
Tax treatment of cryptocurrency transaction types
Each transaction may contribute differently to your taxable income so we’ve provided a list of each transaction for you. For those using Divly for their tax reporting we’ve also provided the associated Divly labels. Below the list we go into more detail on how each transaction contributes to your taxable income.
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 acquisition cost 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. Norges Bank recommends using the following tool. Divly converts to your local currency automatically.
When buying crypto you can add the trading fee to the acquisition cost. This will help reduce your taxes once you sell.
You purchase 1 ETH for NOK 10000 and pay a trading fee of NOK 100. Your acquisition cost for 1 ETH is 10000 + 100 = NOK 10100.
Sell Crypto / Sell Crypto for Fiat
Selling cryptocurrency will always requires you to declare capital gains tax whether it's at a profit or loss. 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.
Say you’ve purchased 1 ETH for 10100 NOK and are now selling it for 20000 NOK with a 300 NOK fee. The profit for youre 1 ETH is 20000 - 10100 - 300 = NOK 9600 . If you are using Divly, all the fees are automated in the calculations.
Trade Crypto for Crypto
In Norway trading crypto for crypto is a capital gains tax event. You must pay capital gains 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 NOK.
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 NOK 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. 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. Capital gains tax is applied to the crypto you sent, and a cost basis is added to the new token at the same price.
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 capital gains 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 capital gains 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 capital gains 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!
Divly automatically matches transactions between your exchanges and wallets to avoid confusing them for taxable crypto sales and trades
Lost or Stolen Crypto
In some situations, you can get a tax exemption on stolen property. However, we are not certain if this also applies to crypto. It would be best to contact Skatteetaten yourself and ask for help with your specific situation.
Give Crypto as a Gift / Receive Crypto as a Gift
If you received crypto as a gift you don’t need to pay taxes on it until you sell it. If possible, ask for the purchase receipt from the person who gave you the crypto gift. You inherit the price they paid as your cost basis.
If you receive cryptocurrency as a gift and want to inherit the acquisition cost you can manually update the transaction’s value in Divly to reflect this.
Skatteetaten does not provide concrete guidelines for donations paid in crypto. However, if we assume they don’t differ from donations in fiat then you can get a tax deduction if the following criteria are met.
The organization must satisfy the tax law's requirements for activity, purpose, and national scope.
The gift must be at least 500 kroner to each organization.
The gift must be pre-filled in the tax return.
You can find a list of currently approved organizations here. You should not fill in any donations yourself. If your donation is not pre-filled then you must contact the organization to which you donated and ask them to report the gift amount to your birth number (fødselsnummer). In 2021 and 2020 the limit for a deduction is 50,000 kroner.
An airdrop is typically considered as a gift from the token holder or blockchain. Airdrops are usually a very small or negligible amount. The value of the airdrops you receive is taxable income.
Often the value of an airdrop at the time of acquisition is 0. If this is the case you can set the acquisition cost to 0 and you will instead be taxed upon sale of the received cryptocurrency.
Hardforks, like airdrops, are considered income at the time of the acquisition. If there is no market value for the received currency then the acquisition cost can be set to NOK 0. You must then pay taxes upon the sale of the received cryptocurrency.
Any crypto you earn from mining is considered taxable income. You must report the value of your mining income in NOK at the time you receive the tokens. Divly too can help you with this. Note that mining is now reported separately on your tax form from other gains. Check our “How to submit your tax report to Skatteetaten'' section below for more.
Staking, an alternative to mining, is also considered taxable income. You must report the value of your staking income in NOK at the time you receive the tokens. Staking income is reported with your mining income. Check our “How to submit your tax report to Skatteetaten” section below for more information.
Lending Your Crypto
The interest you earn from lending is taxed as income. You must report the value of the interest received in NOK at the time that you received it.
Interest expense is usually deductible This applies to everyone who has paid debt interest and/or default interest to a credit institution in Norway. Interest and deductible expenses you paid to a bank should be pre-filled. For any private loans, you should fill in the information yourself on your tax returns.
Think for example of sharing a post or referring a friend to a service. Any crypto you receive for these actions is subject to the income tax. You need to report the value of the reward in NOK at the time you acquired the reward.
Income From Other Activities (e.g. freelancing, salary)
You need to report the value of the income you receive from other activities in NOK at the time of payment.
Margin trading, Futures, and Derivatives trading
Margin trading involves borrowing to take leveraged positions on crypto. The gains and losses you make are eligible for capital gains tax.
DeFi, or decentralized finance, refers to financial activities that take place on a decentralized platform. However, the tax laws for DeFi can be strict. DeFi transactions must be treated as realization events, requiring you to calculate your gains or losses. Token swaps, deposits into liquidity pools in exchange for pool tokens, and conversions to and from wrapped tokens are all considered cryptocurrency-to-cryptocurrency trades and are subject to capital gains tax.
Any returns from a liquidity pool, including asset value increases and rewards for participation, are subject to income tax. When you sell these assets at a later date, you will also need to pay capital gains tax on any profits.
How to calculate your own cryptocurrency taxes
There are a number of choices to calculate your cryptocurrency taxes. You may want to calculate your cryptocurrency taxes manually using an excel spreadsheet, use a tax lawyer, or use a specialized cryptocurrency tax calculator.
The Benefits of Using a Cryptocurrency Tax Calculator
There are several reasons why using a cryptocurrency tax calculator can be the best choice for doing your cryptocurrency taxes:
Accuracy: Cryptocurrency tax calculators automatically calculate cryptocurrency values, gains and losses based on the transactions you input. This can be more accurate than manually calculating these figures, which can be prone to errors.
Ease of use: Cryptocurrency tax calculators are designed to be user-friendly and easy to use, even for those who are not familiar with cryptocurrency taxes.
Up-to-date: Cryptocurrency tax calculators are typically updated with the latest tax laws and regulations, so you can be sure you are using the most current information when calculating your taxes.
Automation: Many cryptocurrency tax calculators allow you to import your transaction data directly from your cryptocurrency exchange or wallet, which can save you a lot of time and effort compared to manually inputting this data into a spreadsheet.
Overall, using a cryptocurrency tax calculator can be a more efficient, accurate, and up-to-date way to calculate your cryptocurrency taxes compared to doing it by hand or using a spreadsheet.
Which calculation option is best for me?
There are several factors to consider when deciding whether to manually calculate your cryptocurrency taxes, use a cryptocurrency tax calculator, or hire a tax lawyer:
Complexity: If you have a relatively simple cryptocurrency tax situation (e.g., you have made a few trades or have only held cryptocurrency as an investment), you may be able to accurately calculate your taxes manually or by using a cryptocurrency tax calculator. However, if your cryptocurrency tax situation is more complex (e.g., you have made many trades, or many types of trades), you may want to try a cryptocurrency tax calculator. Should your situation be unique and you would require additional help it may be beneficial to seek the assistance of a tax lawyer to ensure that you are complying with all relevant tax laws and regulations.
Time: Calculating your cryptocurrency taxes manually can take a significant amount of time, even via a tax lawyer. A tax lawyer may be more time-efficient for a complex tax situation. A tax lawyer can also save you time by doing the work for you. A cryptocurrency tax calculator can prove very time efficient because generally all that is required is to connect your cryptocurrency exchanges or uploading their transaction history files to it. Like a tax lawyer, once you’ve provided the necessary information the cryptocurrency tax calculator will do everything for you.
Expertise: If you are not familiar with cryptocurrency taxes or tax laws in general, you may find it helpful to use a cryptocurrency tax calculator or seek the assistance of a tax lawyer to ensure that you are accurately calculating your taxes and complying with all relevant laws and regulations.
Cost: Using a cryptocurrency tax calculator is usually a relatively inexpensive option, as many of these tools offer a free version or charge a small fee for their services. Hiring a tax lawyer can be more costly, but may be worth it if you have a complex tax situation or need expert advice on your cryptocurrency taxes.
Ultimately, the decision of whether to manually calculate your cryptocurrency taxes, use a cryptocurrency tax calculator, or seek the assistance of a tax lawyer will depend on your individual circumstances and needs.
How to use Divly’s cryptocurrency tax calculator
Using Divly is very simple. All you need to get started is an email address. Once you're in, you can easily connect your wallets or exchanges and import your transaction data. Divly will automatically label your transactions for you , but you can also make any necessary adjustments on the Transactions page. Then, simply head to the Tax Report page to download all the information you need to declare your taxes to Skatteetaten. You can find a more detailed guide to Divly here
How to submit your tax report to Skatteetaten
Once all the tax calculations are done and Skatteetaten’s tax portal is open, it is time to declare your taxes before the deadline in April. You can submit your taxes online or by mail. We will primarily focus on the online portal in this guide. Should you want to call Skatteetaten you can reach them at (800 80 000) between 9:00 and 15:00 on weekdays. If you are abroad you can call +47 22 07 70 00. For the English menu press 9.
For the tax year 2019 and earlier you have to go to Altinn.no and get an RF-1159 form. But from 2019 onwards it is possible to fill in your taxes on Skatteetaten.no.
To report your cryptotaxes go to skatteetaten.no. Scroll down on your tax return to the heading Finans. Here you want to click on Andre finansprodukter og virtuell valuta/kryptovaluta then click on Virtuell valuta/kryptovaluta.
Here you will be given two options to fill out your crypto information. For the first option, you’ll have to input all the required information for each cryptocurrency individually. The second option is to input all the information for all your crypto together. If you choose the second option you will be required to upload attachments that provide the details.
You may find this to be easier if you do not have many unique cryptocurrencies. To select this option check the box saying Jeg vil legge inn opplysninger for hver enkelt. For each of your crypto holdings, you will have to fill in the following information.
Navn på kryptovaluta/virtuell valuta (Name of the cryptocurrency/digital currency). Here you fill out the name of the cryptocurrency you are reporting for.
Antall per 31. desember i inntektsåret (Amount owned on 31 December in the income year). This is asking you how many tokens you’ve had of this cryptocurrency. Say you have 10 Ethereum then you will put 10.
Formuesverdi (Property value) Here you are asked to fill in the value of the respective crypto in NOK at the end of the year.
Skattepliktig gevinst (Taxable gains) Here you fill in your taxable gains in NOK.
Fradragsberrettiget tap(Deductible losses) Here you can fill in your deductible losses in NOK.
Annen skattepliktig kapitalinntekt (Other taxable capital income) This was previously included under taxable gains. You should list your gains from mining and staking here.
Lommebok/wallet-adresse benyttet for denne valutaen (Wallet address used for this currency) Here you should fill in the name of the exchange you use or the wallet address you use.
You must repeat this process for each of the cryptocurrencies you own.
If you own a large number of cryptocurrencies, this next method should be faster. To select this option check the box saying jeg vil legge inn summerte skatteopplysninger for mange virtuelle valuta/kryptovaluta og må laste opp vedlegg som viser detaljer. This translates to "I want to enter summarized tax information and have to upload attachments that show details". Before you fill out the information regarding your currencies you are asked to attach documentation. You can do this using the legg ved dokumentasjon button found above Navn på kryptovaluta/virtuell valuta. Here you should upload a pdf that shows your wealth, gains, losses and other capital income for the year. You should also mention the exchanges and wallet addresses you have used.
Divly can provide you with a document with all the information you need including a pdf to attach to your declaration.
After uploading this attachment you will have to fill in the following information.
Formuesverdi (Property value). The total value of your cryptocurrencies at the turn of the year.
Skattepliktig gevinst (Taxable gains). Here you fill in your taxable gains in NOK.
Fradragsberettiget tap (Deductible losses) Here you can fill in your deductible losses in NOK.
Annen skattepliktig paitalinntekt (Other taxable capital income). This was previously included under taxable gains. You should list your gains from mining and staking here.
Once you are done with either version of entering information you can go down to Årsak til endring/nye opplysninger (reason for the change/ new information) and check the box Lagt til opplysninger som manglet (Added information that was missing). Finally you can hit Ok.
If you are reporting taxes for 2019 and earlier you have to fill out an RF-1159 form on Altinn.no
Above you will see the first half of the rf-1159b form.
From left to right the headings are as follows.
Navn på selskap/verdipapir/finansielt produkt (Name of company/security/financial instrument) Here you can fill in the name of the respective cryptocurrency.
Organisasjonsnummer (Organization number) You can leave this blank as a cryptocurrency does not have an organization number.
Type verdipapir/finansielt produkt (Type of security/financial instrument) Here you must fill in VV for Virtual Valuta.
ISIN-nummer (ISIN-number) You can also leave this blank
Land selskapet er hjemmehørende i (gjelder kun aksjer) (Country the company is domiciled in (only applies to shares)). Again no need to fill anything in.
If you scroll to the right you’ll see the second half of the form.
Antall aksjer/andeler i behold (Number of shares/units retained) With crypto you can own partial tokens and the form requires whole numbers. This column is not relevant to fill in.
Formue(+)/Gjeld(-) (Wealth(+),Debt(-)). Here you can put in your total ownership value in NOK at the turn of the year.
Gevinst (Gains). Here you can put all the capital gains you’ve made through sales and trades.
Tap (Losses). Here you can put all the losses you’ve made through sales and trades.
Utbytte/rente/avkastning (Dividend/Interest/return). You do not need to fill this out.
Anvendt skjerming (Shielding used). You do not need to fill this out.
At this point you’ve successfully filled out the forms you need to do for your cryptocurrency taxes.
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.