It is generally considered speculation when private individuals trade in cryptocurrencies, meaning that the currency is bought with a view to making a profit on the sale.

As a result, you normally have to inform the Danish Tax Agency (Skattestyrelsen) of the profit or loss you make when you sell your cryptocurrencies.

Speculation means that the purpose of buying cryptocurrencies is to make a profit. Cryptocurrency trading is generally considered speculation and that is why you should inform the Tax Agency by stating your profit or loss in your tax assessment notice when you sell your cryptocurrencies.

In case of doubt, we make an overall assessment taking various details related to the purchase into consideration.

Such details could be:

  • What currency did you buy - bitcoins for example?
  • What can it be used for?
  • Is the currency suited for speculation - rise or fall in exchange rate for example?
  • Is it possible to sell the currency with a profit?
  • Why did you buy the currency?
  • Are you the owner of the currency?

You can ask for a specific assessment if you are unsure

If you are unsure whether you are considered to have bought cryptocurrencies with a view to speculation, you can request a binding ruling containing a specific assessment.


Request a binding ruling 

When you sell cryptocurrencies, you should calculate whether you have made a profit or a loss.

Profit or loss is the difference between the purchase price and the selling price.

If you have made several purchases, you should generally calculate your profit or loss according to the First In First Out Principle (FIFO Principle). This means that the cryptocurrencies you bought first are also the first you sell.

You must calculate each transaction separately, which means that you normally cannot offset a loss from one transaction against profit from another transaction.
If you use one type of cryptocurrency (such as bitcoins) to pay for another type of cryptocurrency (such as ribbles), you are considered to have sold bitcoins in order to buy ribbles. That means that you also have to calculate any profit or loss you resulting from the transaction. See how to calculate your transactions according to the FIFO principle and establish whether you have made a profit or a loss in the example below.

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There may be exceptions from the FIFO Principle and you are welcome to contact us if you need further information.

Please note that you enter any profit or loss in your tax assessment notice. You are normally not allowed to offset a loss against any profits you have made. As a rule, you should declare them in separate boxes: Losses in box 58 and profits in box 20 of your tax assessment notice.

Example 1: 

Examples of calculations according to the FIFO Principle

You bought 10 bitcoins at a value of DKK 1,000 apiece in January and 10 bitcoins at a value of DKK 2,000 in February.

You sell 8 of these in March at a value of DKK 3,000 apiece

Purchase price: 8 x DKK 1,000
DKK 8,000
Selling price: 8 x DKK 3,000
DKK 24,000
Profit: DKK 24,000
- DKK 8,000
DKK 16,000

You should enter the profit of DKK 16,000 in your tax assessment notice in box 20.

You are now left with 2 bitcoins from the purchase in January with a purchase price of DKK 1,000 a piece.

At a later point, you sell the remaining 12 at a value of DKK 1,000 apiece.

Purchase price: 2 x DKK 1,000
+ 10 x DK 2,000
DKK 22,000
Selling price: 12 x DKK 1,000
DKK 12,000
Loss: DKK 12,000
- DKK 22,000
- DKK 10,000

You should enter your loss of DKK 10,000 in box 58 in your tax assessment notice.

You have no bitcoins left as you sold all 20 of them.

Example 2: 

How to calculate profit or loss when you use one type of cryptocurrency as payment for another type

 

You bought 2 bitcoins in January for DKK 1,000 each and 1 bitcoin in February for DKK 2,000 each.

Next, you buy 10 ripples and use 2 of your bitcoins as payment for these.

This means that you have sold 2 bitcoins to buy 10 ripples. At the time of transaction, the value of the bitcoins has increased with the result that you get DKK 5,000 for each of them.

Since you should make the calculation according to the FIFO principle, you have to use the two bitcoins you bought first for DKK 1,000.

Purchase price for the 2 bitcoins: 2 x DKK 1,000
DKK 2,000
Sales price for buying the 10 ripples: 2 x DKK 5,000
DKK 10,000
Profit: DKK 10,000
- DKK 2,000
DKK 8,000

You enter the profit of DKK 8,000 in box 20 of your tax assessment notice.

Later, you use your 10 ripples to pay for 1 bitcoin.

At the time of transaction, the value of the ripples has fallen with the result that you get DKK 500 for each of them. The purchase price for the 10 ripples equals the sales price of your 2 bitcoins, which, in this example, is DKK 10,000. This means that 1 ripple has a value of DKK 1,000 each.

Purchase price for the 10 ripples: 10 x DKK 1,000
DKK 10,000
Sales price for buying 1 bitcoin: DKK 10 x 500
DKK 5,000
Loss: DKK 5,000
- DKK 10,000
DKK 5,000

You enter the loss of DKK 5,000 in box 58 of your tax assessment notice.

Be sure to enter both profit and loss

If you have both made a profit and a loss on your transactions, you should normally enter your profit in box 20 of your tax assessment notice and your loss in box 58 of your tax assessment notice, respectively. You should not offset a loss against any profit.

Exceptional offsetting of loss against profit

If you do not own any bitcoins to start off with and buy, for example, 10 bitcoins in one transaction and then sell them in several transactions during the same income year, you may offset your loss against any profit you have made. But a condition for this is that you do not buy any more bitcoins in between your transactions.

This means that if, as an example, you sell 3 bitcoins with a profit and 3 without a profit, you have to make a net calculation.

  • If you are showing a profit after offsetting your loss, you should enter the profit in box 20 of your tax assessment notice.
  • If you are showing a loss after offsetting your loss, you should enter the loss in box 58 of your tax assessment notice.

If, however, you subsequently buy more bitcoins before you sell the last 4 from your original holding of 10, you should not make a net calculation. Instead, you should calculate each transaction individually according to the FIFO principle (FIFO = First In First Out). This means that the cryptocurrencies you bought first are the first ones you sell.

You cannot offset loss against profit from different kinds of cryptocurrency that were bought in several transactions and sold in the same income year. 

If in doubt, please contact us.

Correcting your tax assessment notice

  1. Log on by using your NemID
  2. Click 'Ret årsopgørelsen/oplysningsskemaet' (Correct your tax assessment notice/tax return).
  3. box 20 'Anden personlig indkomst uden AM-bidrag' (Other personal income not subject to labour market contributions).
  4. Enter your loss for the year in box 58 'Øvrige lønmodtagerudgifter' (Other employment-related expenses). Please note that you should not deduct your personal allowance stated next to the box.
  5. Click 'Godkend' (Accept).
  6. You have now corrected your tax assessment notice.

If you want to avoid outstanding tax you can state your expected profit or loss in your preliminary income assessment.

Correcting your preliminary income assessment

  1. Log on by using your NemID
  2. Click 'Forskudsopgørelsen' (Preliminary income assessment).
  3. Enter your expected profit for the year in field 250 'Anden personlig indkomst uden AM-bidrag' (Other personal income not subject to labour market contribution).
  4. Enter your expected loss for the year in field 449 'Øvrige lønmodtagerudgifter' (Other employment-related expenses). Please note that you should not deduct your personal allowance stated next to the field.
  5. Click 'Beregn' (Calculate) and then 'Godkend' (Accept).
  6. You have now corrected your preliminary income assessment.

When you buy and sell cryptocurrencies, you should keep certain information as documentation of your profit/loss calculation.

Such documentation could be:

  • Vouchers on orders, purchases, sales and payment
  • E-mails and other correspondence
  • Information about your wallet provider
  • Basis of agreement with your wallet provider
  • Information about the number of your wallet, meaning the public code
  • Basis of agreement in force at the time of purchase and possible subsequent changes
  • Printout of your cryptocurrency holdings
  • Bank account statements related to purchases and sales of cryptocurrencies
  • Printout of your transactions
  • Possible other relevant documentation of your purchases and sales to verify your ownership

If you move to Denmark

If you move to Denmark and become liable to pay tax to Denmark, you can request information about how your stock of cryptocurrencies will be considered for tax purposes. You do so by requesting a binding ruling from the Danish Tax Agency (Skattestyrelsen). This ruling is our decision on how you should handle your cryptocurrencies in relation to tax.

Request a binding ruling 

If you leave Denmark

If you leave Denmark and you no longer have a tax liability in Denmark, we will consider your stock of cryptocurrencies to be sold at market value on the day you left the country.

This means that if on the day you left Denmark the value exceeded the value at the time of purchase, you should enter the difference as profit in your tax assessment notice. If on the day you left Denmark the value was less than that at the time of purchase, the loss is tax-deductible.

If you cannot correct your tax assessment notice or if you have any questions about taxation of cryptocurrencies, please contact us.

You get a deduction by entering your loss in box 58 of your tax assessment notice.

You pay tax by entering your profit in box 20 of your tax assessment notice.

Read more and see a step-by-step guide to correcting your tax assessment notice in the section Entering profit and loss in your tax assessment notice..

When you sell cryptocurrency, you must calculate whether you earned a profit or suffered a loss. You calculate any profit or loss as the difference between the purchase and the selling price. If you use one type of cryptocurrency to pay for another type of cryptocurrency, this also constitutes a sale where you must calculate profit or loss on the cryptocurrency you sold.

Each transaction must be calculated separately, which means that you cannot normally offset loss on one transaction against profit on another transaction.

If you have made several purchases, you usually calculate any profit or loss according to the FIFO principle (FIFO = First In First Out). This means that the cryptocurrencies you bought first are the first ones you sell.

Read more and see examples of how to calculate profit or loss in the section Calculating your transaction.

You can read about the exceptional cases where you may offset loss against profit in the section Entering profit and loss in your tax assessment notice.

No, normally not.

As a rule, you have to calculate each transaction separately. A loss from a transaction in a cryptocurrency cannot be offset against profit from another transaction. Losses must be entered in box 58 and profits must be entered in box 20 of your tax assessment notice.

You are only entitled to a deduction if you can document that you are.

Read more in the section Entering profit and loss in your tax assessment notice and in Calculating your transaction.

You should save data and relevant documentation, such as vouchers for orders, purchases, sales and payments you have made in relation to calculating profits and losses for all the income years you have traded in cryptocurrencies.

See a list of what you should save in Keep your purchase and sales data.

No, it is only when you sell cryptocurrency that you need to declare any loss or profit. However, you should save all purchase documents so that you can document your calculation to us in case of a sale.

This calls for a specific assessment, so please contact us if you would like us to give you a binding ruling with a specific assessment.

Apply for a binding ruling

Read more in Danish about speculation and gifts in the section ‘Spekulationshensigten kan opgives’ (Declaration of intent of speculation) in our Danish-language legal guide

You must document a loss to get a deduction.

If the loss is due to a passcode to a virtual wallet you have lost, the contents of the virtual wallet will not be lost as the ownership of the wallet will be maintained. In order to be entitled to a deduction for a loss incurred on cryptocurrency bought for speculative purposes, it is a requirement that the cryptocurrency was in fact sold.

If you have bought cryptocurrency that is no longer supported by an exchange service, you are not entitled to a deduction as this is dependent on the cryptocurrency actually being sold. 

If a cryptocurrency bought for speculative purposes is lost through fraud, bankruptcy, theft, etc., we recommend that you apply for a binding ruling.

Apply for a binding ruling

Yes, if you are fully tax liable, you must pay tax in Denmark regardless of whether you traded in cryptocurrency in or outside Denmark.

We recommend that you contact us for a binding ruling if you are uncertain of what to do. Such a binding ruling is our decision on what the sale of cryptocurrencies means to your tax affairs.

If you have sold cryptocurrencies this year

If you sell cryptocurrencies this year and you are uncertain whether you will be taxed on the profit, please contact us for a binding ruling.

Request a binding ruling

Request a binding ruling

If you have sold cryptocurrencies prior to this year

If you have sold cryptocurrencies before this year without entering the profit or loss in your tax assessment notice, you should correct the relevant notice.

If you are unsure whether your profit or loss from previous years is subject to tax or entitles you to a deduction, you are welcome to contact us for a binding ruling.

Request a binding ruling

Log on and correct your tax assessment notice