If there is one concern every crypto investor or trader has, it must be how crypto is actually taxed and how to report your taxes accurately. Luckily for Danish taxpayers, the Danish Tax Agency, or Skattestyrelsen, has published tax guidance that addresses the topic of crypto taxes. Read on to learn more about how crypto is taxed in Denmark, how much tax you must pay on your crypto gains, and how to report your crypto taxes to the Danish Tax Agency.
Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything important, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.
We are also updating this guide regularly based on the latest tax guidelines and statements from Skattestyrelsen. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:
Latest updates
- August 27, 2022: The first version published
Let’s start with the most important question of all…
Do you pay tax on cryptocurrencies in Denmark?
Profits from selling or otherwise disposing of cryptocurrency are taxed as personal income tax rather than capital gains tax in Denmark. This means that depending on your total income and allowable deductions, your profits will be subject to a maximum tax rate of 52.07% for the 2022 tax year.
How is crypto taxed in Denmark?
Cryptocurrencies are not viewed as official currencies such as the Danish krone or euro by the Danish Tax Agency. This means that profits from selling or otherwise disposing of cryptocurrency attract income tax rather than capital gains tax for Danish individuals.
So now that we know crypto gains are taxed as income, does it mean that you always have to pay income tax if you sell or otherwise dispose of a crypto asset? The answer is that it depends.
Unless you are considered to be investing in or trading cryptocurrencies as a business, you are required to pay income tax only if your intention with buying cryptocurrencies is to gain a profit when you sell the coins later. While Skattestyrelsen lets you file a request for a specific assessment to judge whether you are considered to have bought cryptocurrencies for speculation or not, most Danish individuals will be categorized as speculators by the Danish Tax Agency and will therefore be required to pay income tax on their gains.
If you believe that you should not be considered a speculator, you must be prepared to provide enough evidence that supports your case that you did not buy a cryptocurrency with the intention of making a future profit.
In the next section, we will look at the current income tax rates in Denmark.
Income tax rates in Denmark
Individuals that are Danish tax residents will generally be taxed up to a maximum rate of 52.07% on their worldwide income. While this tax rate may seem quite high, most people will pay a lower tax rate considering different allowable deductions and tax breaks.
To understand the Danish tax rate system, we need to first define the different types of income tax that apply:
- National income tax
- Municipal tax
- Labour market tax
- Church tax
To complicate things even further, the Danish tax system categorizes income from various sources into different types such as personal income and share income. Here is a brief overview of the tax rates for 2022:
State taxes
| Taxes | Income basis | Tax rate |
|---|---|---|
| Bottom tax | Personal income | 12.10% |
| Top tax | Personal income | 15.00% |
Local taxes
| Taxes | Income basis | Tax rate |
|---|---|---|
| Municipal tax (average) | Taxable income | 24.982% |
| Labor market tax | Personal income | 8.00% |
Share tax
| Taxes | Income basis | Tax rate |
|---|---|---|
| DKK 0 to 57,200 | Share income | 27.00% |
| DKK 57,200+ | Share income | 42.00% |
Does this sound confusing? Let’s break down the actual taxes you must pay on your crypto gains in more detail.
First, we have the bottom tax and top tax that are considered state taxes. All Danish tax residents are required to pay the fixed bottom tax rate of 12.10% on their personal income – this includes also profits from cryptocurrencies. If your total tax base exceeds DDK 552,500 in 2022, then you must also pay the top tax rate of 15% on the amount that exceeds the base. This means that Denmark uses a progressive tax system.
Next, we need to consider the local taxes, more specifically the municipal tax and labor market tax. The municipal tax is calculated using a flat rate but varies between the different municipalities. The average rate is however 24.982% for the 2022 tax year. The labor market tax is a flat rate of 8%.
Finally, we have the church tax which is imposed at a flat rate that varies between the different municipalities. The country average is 0.70% and is only charged for Danish individuals that are members of the Danish State Church. Keep in mind that share tax as seen in the table above does not apply to cryptocurrencies since this is only applicable to dividends and capital gains on shares.
This is definitely a mouthful of taxes, so it’s okay to take a deep breath at this point. Keep in mind that the upper limit to how much tax you pay on personal income is 52.07% as already mentioned, but most Danish people will end up with a much lower tax rate around 37% on their crypto profits due to various tax-free allowances and deductions.
For more information about the applicable income tax rates and the Danish tax rates in general, we recommend contacting Skattestyrelsen directly.
Calculating gains and losses
Each time you sell or otherwise dispose of a cryptocurrency you need to calculate the resulting gain or loss. First, we need to determine both the sales price and purchase price of the asset sold. The selling price is simply the value of the cryptocurrency sold at the time of the transaction in Danish kroner. The purchase price should be determined using the First-in First-out (FIFO) principle.
You can also add any trading or brokerage fees to the cost basis that were associated with the transaction. This means that trading fees are fully deductible against your profits.
The general formula for calculating the profit or loss is:
profit or loss = selling price – purchase price
The Danish Tax Agency states very explicitly that you are normally not allowed to offset a loss against any profits during the same year. So as a rule, you are required to report gains and losses separately when you file your taxes – we will explain this more in detail later.
Let’s look at an example to better understand how to calculate profits and losses from cryptocurrency transactions:
Example 1
Søren bought 0.2 BTC for kr. 75,000 in December of 2021. Two months later, in February of 2022, he buys 0.3 BTC for kr. 100,000. Søren owns now 0.5 BTC which he has paid a total of kr. 175,000 for.
In March of 2022, Søren decides to sell 0.4 BTC while keeping 0.1 BTC as a long-term investment. He sells 0.4 BTC and receives kr. 200,000 in exchange. His transactions can be seen in the table below:
| Type | Date | Amount | Price | Cost Basis | Profit/Loss |
|---|---|---|---|---|---|
| Buy | 2021-12-10 | 0.2 BTC | kr. 75,000 | kr. 75,000 | |
| Buy | 2022-02-08 | 0.3 BTC | kr. 100,000 | kr. 100,000 | |
| Sell | 2022-03-15 | 0.4 BTC | kr. 200,000 | (?) | (?) |
The first thing Søren needs to do is to calculate the acquisition price of the 0.4 BTC sold using the FIFO method: kr. 75,000 + 0.2 / 0.3 * kr. 100,000 = kr. 141,670.
Since we know the sales price was kr. 200,000, we can find the resulting capital gains directly: kr. 200,000 – kr. 141,670 = kr. 58,330.
The resulting table will look like this:
| Type | Date | Amount | Price | Cost Basis | Profit/Loss |
|---|---|---|---|---|---|
| Buy | 2021-12-10 | 0.2 BTC | kr. 75,000 | kr. 75,000 | |
| Buy | 2022-02-08 | 0.3 BTC | kr. 100,000 | kr. 100,000 | |
| Sell | 2022-03-15 | 0.4 BTC | kr. 200,000 | kr. 141,670 | kr. 58,330 |
Søren needs to report the gain of DKK 58,330 in his tax return for 2022 which he will file in 2023.
Do you pay tax when buying crypto in Denmark?
Whether or not you are taxed at the time of buying crypto depends on which currency is used as means of payment. Buying crypto with fiat is not taxed because no cryptocurrency is disposed of while buying crypto with another crypto is seen as a taxable event.
Buying cryptocurrency with fiat currency
As long as you are using a fiat currency for buying cryptocurrency – you are not taxed. This applies to all fiat currencies including Danish kroner, euros, US dollars, etc.
Keep in mind that you should make it a habit of keeping track of all your purchases including the purchase date, amount, and how much you paid since you need this information later when calculating your profits and losses when selling the coins you bought.
Buying crypto and paying with another crypto
If you have purchased one cryptocurrency with another cryptocurrency you need to also calculate the profit or loss on the crypto that was used as payment. If you have bought ETH using BTC as payment, you now need to calculate the cost basis and the proceeds for the bitcoin you sold.
Do you pay tax when selling crypto in Denmark?
Similar to most countries, selling crypto is always a taxable event in Denmark. The general rule is that each time you are disposing of a cryptocurrency, you have also triggered a taxable event in the eyes of the Danish Tax Agency.
Selling cryptocurrency for fiat currency
Selling crypto is always a taxable event in Denmark. Which currency you are selling the cryptocurrency for does not matter in this situation, so the same tax rules apply whether you are receiving another cryptocurrency, a stablecoin, or a fiat currency in exchange.
Selling crypto for another crypto
Selling crypto for another crypto is similar to buying crypto for another crypto and is therefore a taxable event that attracts Income Tax on the profits.
Is crypto mining taxed in Denmark?
The crypto tax guidance from Skattestyrelsen does not mention how crypto mining is taxed specifically, but we can lean towards a ruling from 2018 to understand how mining rewards are considered from a tax perspective.
The important takeaway from the ruling is that Skattestyrelsen concluded that bitcoin mining was considered to be a hobby activity rather than a professional business activity (“erhvervsmæssig virksomhed”). This means that all income from mining bitcoin or other cryptocurrencies will be taxed as Income Tax at the time of receipt. You should use the fair market value on the date of the transaction to calculate the income amount.
You will also pay Income Tax if the cryptocurrency appreciates in value from the date you received the coins and until you sell them later in the future. On the other hand, if the crypto depreciates in value, you can claim a capital loss. Income from mining should be declared in box 20 for “non-commercial business activity”.
Taxes on crypto staking rewards
Similar to cryptocurrency mining, the Danish Tax Agency does not mention specifically how staking rewards are taxed. However, considering that almost all other countries in the world tax staking rewards similar to mining rewards, we can only assume that the same rule applies in Denmark too. The safe approach is therefore to report all income from cryptocurrency staking in your annual tax return using the fair market value on the date of the transactions.
Are crypto airdrops taxed in Denmark?
You might have received one or several cryptocurrency airdrops simply by holding another cryptocurrency in a wallet or on a centralized exchange. To the best of our knowledge, Skattestyrelsen has yet to make an official stance on how cryptocurrency airdrops should be taxed. There is no mention of airdrops in the crypto tax guidance, and no previous ruling involving airdrops can be found either.
In most cases, airdrops have either negligible or zero value, so from a tax perspective, there is not much to report. However, some airdrops might actually be of significant value such as the Uniswap airdrop in 2020. Similar to mining and staking rewards, the safe approach is to report airdrops of non-negligible value as income in your annual tax return. This way you are at least being proactive and significantly reducing the chance of getting penalized in the future for underreporting your taxable income.
Other crypto transactions
By now it should be clear how buying, selling, and trading cryptocurrency is taxed in Denmark. We have also touched upon mining, staking, and airdrops which many Danish individuals may have been involved with. But there are also other ways to interact with cryptocurrencies that may or may not trigger a taxable event.
Tax on hard forks
Most hard forks, such as the Bitcoin Cash hard fork that happened in 2017, have zero value at the time of the blockchain split since the newly created cryptocurrency is not yet trading on any exchanges. This means that from a tax perspective, you have essentially received a cryptocurrency of zero value and there is no tax to be paid in this case. But keep in mind that if you sell the coins in the future, you need to pay Income Tax on the full amount using a zero cost basis.
The Danish Tax Agency has not issued specific guidance on the tax treatment of hard forks yet. If you have received a cryptocurrency from a hard fork that did in fact have a non-zero value at the time the coins became available in your wallet, we recommend contacting Skattestyrelsen directly to clarify this.
Gifting cryptocurrency
How gifts are taxed in Denmark depends on the value of the gift, to whom you are giving the gift, and also the original purpose for acquiring the gifted asset. According to Section 5 of the State Tax Act, private assets that were acquired without the intention of speculating on future profits can generally be gifted without triggering a taxable event. Skattestyrelsen has previously ruled that gifting cryptocurrency is not taxed, but there are many nuances to consider so it’s likely that each unique case must be considered individually.
Gifts that are in fact considered taxable events attract a gift tax of 15%. Denmark also has tax-free gift allowances where the tax-exempt amount depends on the relation between the person giving and receiving the gift. If the receiver of the gift is a direct descendant, such as your children or grandchildren, the tax-free allowance is DKK 59,500 in 2022. Gifts given to unrelated individuals are not tax-exempt and are generally considered as ordinary income.
Receiving salary in a cryptocurrency
Being paid in cryptocurrency, either as a salary from employment or in exchange for services as a freelancer, is taxed similar to being paid in Danish kroner or another fiat currency. This means that from a tax perspective, there is no practical difference in what type of currency you receive your compensation – the income amount will be taxed as income in all cases.
To calculate the income amount in DKK at the time of receipt, you can use cryptocurrency prices from any reputable exchange – or let Coinpanda handle all the calculations automatically for you!
How to calculate crypto taxes in Denmark
If you are a Danish taxpayer and have transacted with cryptocurrency during 2022, you need to calculate the realized gains and income from all transactions. There are essentially two different ways to go about this – either manually or using a crypto tax calculator.
Let’s look at both methods:
Calculating your crypto taxes manually
Here are the steps you must take to calculate your crypto taxes manually:
- Download the transaction history from all exchanges where you have bought, sold, received, or sent any cryptocurrency. This includes also transactions from or to your own wallets.
- Calculate the cost basis for every individual transaction where cryptocurrency is disposed of
- Calculate the proceeds and resulting capital gains for all transactions that are considered taxable disposals by Skattestyrelsen
- Identify all transactions subject to income tax by Skattestyrelsen
- Summarize the calculations to find the total taxable amount during the financial year
Calculating your crypto taxes using crypto tax software
The best option for most people in Denmark is likely going to be using cryptocurrency tax software to automatically do the required calculations. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:
1. Sign up for a 100% free account
It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.
Sign up with Coinpanda for free now!
2. Connect all your exchange accounts and wallets
Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda does not support an exchange you have used, reach out to us so we can add the integration – usually within a few days.
3. Wait for Coinpanda to crunch all the numbers
Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have.
4. Check for any reported warnings
Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.
Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.
5. Download your tax reports and tax forms
When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes in Denmark. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.
Crypto tax deadline in Denmark
The tax year in Denmark runs from January 1 to December 31 each year. Your crypto taxes should be reported in your annual tax return where you also report ordinary income from employment.
For the 2022 tax year, the tax filing deadline is May 1st, 2023.
How to report crypto taxes in Denmark
The easiest way to report your taxes is using the E-tax online portal. After logging in to E-tax using your NemID or MitID, you can see and change your preliminary income assessment and also pay the outstanding tax when the time comes.
When you are done calculating your crypto taxes, you should report the profits on box 20 and losses on box 58 of your income tax assessment. It’s important that you do not offset your losses against the profits directly since this must be reported separately.
- Profits on box 20 – “Anden personlig indkomst uden AM-bidrag”
- Losses on box 58 – “Øvrige lønmodtagerudgifter”
Which records may Skattestyrelsen ask for?
The Danish Tax Agency has been conducting several audits of Danish taxpayers’ cryptocurrency transactions in the past, so keeping good records of your transactions involving cryptocurrencies is of uttermost importance. Not only is this required in case you get audited, but you will also need a complete history of your transactions to calculate your profits and losses that you must report in your annual tax return.
As a general rule, these are the details you need to keep records of:
- Receipts on orders, purchases, and sales
- E-mails and other correspondence
- Information about your wallet provider
- The public keys of your wallet
- Documentation of your cryptocurrency holdings
- Bank account statements related to buying and selling cryptocurrencies
- Complete records of your transactions
- Other relevant documentation of your purchases and sales to verify your ownership
You should periodically take backup of these records from all exchanges you have traded on since many exchanges keep these records for a limited time only – or the exchange itself may cease to exist in the future. You can also use a cryptocurrency tax app like Coinpanda to generate a report with all this information automatically.
