Denmark crypto taxes
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Cryptocurrency Taxes in Denmark: Investor’s Guide 2022

Reporting your cryptocurrency taxes in Denmark can feel like a nightmare.

Cryptocurrency’s unique properties make tax reporting a challenge for investors all around the world. In addition, the Danish Tax Agency (Skattestyrelsen) has not yet provided guidance on how various crypto transactions are taxed.

In this guide, we’ll break down everything you need to know about how cryptocurrency is taxed in Denmark. By the time you finish reading, you’ll learn how different transactions are taxed, how to calculate your gains and losses, and how to report your cryptocurrency transactions on your taxes in minutes.

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Chapter 1

The basics of cryptocurrency taxes

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How is cryptocurrency taxed?

In Denmark, cryptocurrencies are considered personal assets rather than currencies like the Danish Kroner or the Euro.

As a result, profits from the sales and disposals of cryptocurrencies are subject to income tax, not capital gains tax.

Is my cryptocurrency a speculative asset?

Personal assets like cryptocurrencies are subject to income tax if one of the following conditions are true.

  1. The asset is part of an individual’s business
  2. The asset is acquired for speculative purposes

In most cases, investors acquire crypto-assets with the expectation of a future return. As a result, cryptocurrency is subject to income tax in the vast majority of cases.

If you believe that your crypto-assets don’t fall into the ‘speculative asset’ category, you must provide evidence that you acquired your crypto without the intention to make a future profit.

How much is cryptocurrency taxed?

In Denmark, income from cryptocurrency and other sources are subject to the following tax.

  • National income tax
  • Municipal tax
  • Labour market tax
  • Church tax
Denmark state tax rates
Denmark local tax rates

What is bottom bracket and top bracket tax?

All Danish tax residents are required to pay bottom bracket tax on their first 552,000 DKK income.

If you make more than 552,000 DKK of income, you’ll be required to pay 15% tax on all your income above that threshold.

tax brackets

What local taxes do I pay on cryptocurrency?

Local taxes include municipal tax and labor market tax.

Your municipal tax varies depending on where you live in Denmark — for the 2022 tax year, the average municipal tax is 24.982%.

The labor market tax is a flat 8% rate.

Do I pay church tax on cryptocurrency?

If you’re a member of the Danish State Church, you’ll pay an additional Church Tax on your income from cryptocurrency and other sources. While church tax varies depending on your municipality, the average Church Tax is around 0.70%.

What’s the effective tax rate on cryptocurrency?

Including all the tax rates listed above, it’s been estimated that the average Dane pays an effective income tax rate of 37%. This may vary depending on your municipality and your income level.

How do I calculate my gains and losses from crypto?

To calculate your gains and losses from crypto, you can use the following formula.

Gain/Loss = Proceeds - Cost Basis

In this case, your cost basis is how much you paid to acquire your cryptocurrency (including fees related to acquisition). Meanwhile, your proceeds are how much you received for disposing of your cryptocurrency (including fees related to disposal).

To better understand how this works, let’s take a look at an example.

capital gain example

Can the Danish Tax Agency track cryptocurrency?

Because cryptocurrency transactions are pseudo-anonymous, many investors assume that tax agencies cannot track cryptocurrency gains, losses, and income. This is a myth.

In the past, the Danish Tax Agency (Skattestyrelsen) has requested and received information from cryptocurrency exchanges — including trades, names, addresses, and central person registration (CPR) numbers.

In addition, it’s important to remember that transactions on blockchains like Ethereum and Bitcoin are publicly visible. Tax agencies around the world use data matching to match ‘anonymous’ wallets to known individuals.

How to avoid cryptocurrency taxes in Denmark

While there’s no legal way to evade your cryptocurrency taxes, you can use the following strategies to legally reduce your tax bill.

Personal tax allowance

Individual taxpayers over 18 receive a tax-free allowance of 46,700 DKK. If your full allowance is not used, you can transfer your allowance to your spouse.

Realize capital losses

30% of the value of your cryptocurrency losses can be used to offset gains.

Non-speculative purposes

There may be some circumstances where you acquired cryptocurrency without the intention to make a profit. If this is the case, your transactions are tax-free. You can petition the Danish Tax Agency to assess your individual investments.

Tax-free cryptocurrency transactions

The following transactions are tax-free in Denmark.

  • Buying cryptocurrency with fiat currency
  • Transferring crypto between wallets
  • Holding cryptocurrency
  • Donating cryptocurrency

When do you need to report your crypto taxes?

In Denmark, the tax year runs from January 1st to December 31st. You’re required to file your taxes on cryptocurrency and other income sources by May 1st of the following year.

What cost basis method should I use for crypto?

If you’ve bought your cryptocurrency at multiple price points, you can use the first-in first-out (FIFO) method to calculate your capital gains and losses. That means that the first units of cryptocurrency that you acquired are also the first units that you dispose of.

FIFO method explained
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Chapter 2

Taxability of different transactions

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How is buying cryptocurrency taxed in Denmark?

Buying cryptocurrency with fiat currency like the Danish kroner is considered tax-free.

However, you should keep careful records of your cryptocurrency purchases so that you can calculate your gains and losses in the case of a future disposal.

How is holding cryptocurrency taxed in Denmark?

There is no tax for simply holding cryptocurrency. You’ll only be taxed on your gains if you dispose of your cryptocurrency.

How is selling cryptocurrency taxed in Denmark?

When you sell cryptocurrency, you recognize income based on how the price of your crypto has changed since you originally received it.

How are crypto-to-crypto trades taxed in Denmark?

Trading cryptocurrency for other cryptocurrencies is considered a taxable disposal. If the price of the cryptocurrency you’re trading away has gone up since you originally received it, you’ll recognize income subject to income tax.

You’ll recognize income or capital gains depending on whether you’re classified as an investor or a trader.

crypto-to-crypto trades tax

How is transferring crypto between different wallets taxed in Denmark?

Transferring crypto between different wallets that you own is considered tax-free.

However, you should keep careful records of the original cost basis of your cryptocurrency so that you can calculate your capital gains and losses in the case of a future disposal.

How are cryptocurrency losses taxed in Denmark?

Capital losses can partially offset your capital gains for the year. In Denmark, 30% of the value of capital losses can be used to offset capital gains.

capital losses tax

How is cryptocurrency mining taxed in Denmark?

Cryptocurrency mining rewards are considered income. You’ll pay income tax based on the fair market value of your crypto at the time of receipt.

If you dispose of your mining rewards in the future, you’ll be taxed depending on how the price of your crypto has changed since you originally received it.

capital gain example

How is cryptocurrency staking taxed in Denmark?

The Danish Tax Agency has not put out any guidance on how cryptocurrency staking is taxed.

In most countries, crypto earned through staking is taxed as income based on its fair market value at the time of receipt. It’s likely that Denmark will take a similar approach to taxing staking rewards.

If you dispose of your staking rewards in the future, you’ll be taxed depending on how the price of your crypto has changed since you originally received it.

How are cryptocurrency airdrops taxed in Denmark?

At this time, the Danish Tax Agency has not put out guidance on how airdrops are taxed.

It’s likely that airdrops will be taxed as income based on the fair market value of your cryptocurrency at the time of receipt.

If you dispose of your airdrop rewards in the future, you’ll be taxed depending on how the price of your crypto has changed since you originally received it.

How is DeFi taxed in Denmark?

At this time, the Danish Tax Agency has not put out any guidance on how DeFi is taxed. It’s reasonable to assume that DeFi transactions will be subject to the same rules as other cryptocurrency transactions.

  1. Earned cryptocurrency is subject to income tax
  2. Crypto-to-crypto swaps and other disposals are subject to income tax

Many DeFi protocols utilize unique transaction structures that make it difficult to tell whether an earning event or disposal occurred. If you have questions about a specific DeFi transaction or protocol, you should reach out to your tax professional.

Chapter 3

How to report your crypto taxes in Denmark

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What types of records do I need for my crypto taxes?

It’s recommended that you keep records of the following information in case of a cryptocurrency tax audit.

  • Receipts of orders, sales, purchases, and trades
  • Relevant emails and other correspondence
  • Information about your wallet providers
  • Your public wallet address(es)
  • Relevant bank accountant statements for cryptocurrency transactions
  • Other relevant documentation to verify ownership of cryptocurrency

How do I calculate my crypto taxes in Denmark?

To accurately report your cryptocurrency taxes, you’ll need to calculate your gains, losses, and income from your transactions. You can do this manually or through crypto tax software.

Calculate your crypto taxes manually

If you wish to calculate your crypto taxes yourself, you can follow the process below.

  1. Identify all of your taxable cryptocurrency transactions during the year.
  2. Use the FIFO method to determine your cost basis for cryptocurrency disposals.
  3. Calculate your income for each cryptocurrency transaction.
  4. Report your income to the Danish Tax Agency!

It’s important to remember that this approach requires serious effort— especially if you’ve used multiple wallets and exchanges during the tax year. In this case, it may be difficult to track your cost basis and calculate your gains from disposals.

Calculate your crypto taxes with CoinLedger

Step 1: Import your transactions from your exchanges and wallets.

Step 2: Watch the platform calculate your income and capital gains.

Step 3: Generate your tax report!

How to report your cryptocurrency taxes in Denmark

Once you have an accurate record of your cryptocurrency transactions, you can report your taxes and pay your outstanding tax balance on the E-tax online portal. To log in, you’ll need your civil registration number and your E-tax password.

You can report your profits from cryptocurrency in box 20 and your cryptocurrency losses in box 58.

Get started with CoinLedger

You don’t need to rely on spreadsheets to file your cryptocurrency taxes. CoinLedger is designed to simplify the process!

Try CoinLedger today and see for yourself why more than 300,000 investors around the globe use the platform to take the stress out of tax season!

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