Denmark's Tax Authority Sends Warning Letters to 20,000 Crypto Owners

The tax authority of Denmark has reportedly despatched out warning letters to 20,000 crypto house owners asking them to amend their tax returns, pay taxes on crypto positive aspects, or face penalties. The tax company is demanding a full breakdown of their crypto transactions; it just lately obtained data on these merchants from three native crypto exchanges.

Additionally learn: IRS Now Requires Tax Filers to Disclose Crypto Actions

Warning Letters to Crypto Buyers

Danish Skattestyrelsen, the tax authority of Denmark, has reportedly despatched out warning letters to 20,000 cryptocurrency house owners. Swedish crypto tax startup Koinly posted a duplicate of the letter on its web site on Monday. The corporate detailed:

Within the final 2 weeks, the company started sending out warning letters to those buyers urging them to amend their tax reviews by the 15th of December or face penalties.

Denmark's Tax Authority Sends Warning Letters to 20,000 Crypto Owners

“A lot of our Danish customers have acquired these letters, Skat is asking for a full breakdown of all their transactions and asking them to repair all previous reviews as nicely,” mentioned CEO Robin Singh who based Koinly final 12 months. “Submitting tax on cryptocurrency trades is a troublesome job as crypto merchants normally maintain a number of change accounts and wallets and freely switch crypto between them, so there’s no straightforward manner to determine what the capital positive aspects are for any specific commerce.” The corporate claims to have helped hundreds of crypto buyers observe and generate tax reviews for funds price over $250 million final 12 months.

Tax Company Has Information on 20,000 Crypto Merchants

Earlier this 12 months, Skattestyrelsen introduced that it had been licensed by the nation’s tax council, Skatterådet, to acquire data on crypto merchants utilizing native exchanges. The company then introduced on Aug. 29 that it had acquired data on 20,000 residents buying and selling cryptocurrency on these platforms. The tax company declared:

For the primary time, the tax authorities have acquired data on buying and selling, for instance, bitcoins, on Danish crypto exchanges. In complete, data of approx. 20,000 residents.

Denmark's Tax Authority Sends Warning Letters to 20,000 Crypto Owners

The exchanges have been required to supply data on all crypto purchases and gross sales made between Jan. 1, 2016, and Dec. 31, 2018. The info obtained consists of “identification data akin to names, addresses, social safety numbers and probably CVR [business registration] data,” Skattestyrelsen revealed.

How Crypto Transactions Are Taxed in Denmark

The Danish tax authority explains on its web site that buying and selling bitcoin or different cryptocurrencies is taken into account hypothesis, which means that the aim of buying them is to make a revenue. Subsequently, as a common rule, earnings or losses from their gross sales have to be disclosed to the tax authority. Anybody unclear whether or not their buying and selling actions are thought-about hypothesis can ask the tax company for a particular “binding” reply, which prices DKK 400 ($60) and takes between 3-6 months. The reply is legitimate for a most of 5 years.

The letters despatched to some 20,000 crypto merchants request details about earnings and losses from crypto transactions made throughout the fiscal 12 months 2016 via 2018, calculated utilizing the FIFO technique. The tax company’s web site describes:

If in case you have a number of purchases, you have to initially calculate earnings and losses based on the FIFO precept (FIFO = First In First Out). Which means the bitcoins you got first are those you promote first.

Denmark's Tax Authority Sends Warning Letters to 20,000 Crypto Owners

Tax Companies Worldwide Turning Consideration to Cryptocurrencies

A rising variety of tax authorities worldwide are turning their consideration to cryptocurrencies as they’ve develop into extra common with rising market capitalizations. Koinly asserted Monday that “Tax companies are being attentive to bitcoin and wish to keep away from it being seen as a protected haven from taxes.” CEO Singh famous that Denmark has particular legal guidelines about how capital positive aspects are reported, elaborating:

You possibly can solely offset earnings with losses from the identical cryptocurrency throughout the identical revenue tax 12 months. That is completely different from the way it works in different nations so present options require a number of guide work.

The Danish tax authority is just not the one one which has despatched letters to crypto buyers. The U.S., Canada, and India are among the many nations which have equally despatched letters to crypto house owners looking for to tax their crypto positive aspects.

In July, the U.S. Inside Income Service (IRS) introduced that it despatched out letters to over 10,000 crypto buyers reminding them of their tax obligations. The IRS has additionally stepped up different efforts to determine and convict crypto tax evaders. In its report issued final week, the company emphasised that “Cryptocurrencies are undermining the monetary and tax system,” including that cyber criminals “now deal in cryptocurrency, once more considering it will make them nameless, however our brokers have as soon as once more proved that there’s nowhere to cover. We won’t cease in our pursuit.” Moreover, the IRS is now utilizing a brand new tax type requiring all tax filers to reveal whether or not they acquired, offered, despatched, exchanged, or acquired any crypto throughout the 12 months.

“As laws and tips round cryptocurrency taxes clear up, extra individuals are more likely to obtain related letters,” Koinly wrote. “That is simply step one within the struggle in opposition to tax evasion and extra severe actions are more likely to be taken in opposition to buyers sooner or later so it’s a good suggestion to get your affairs so as as early as attainable.” Information.Bitcoin.com has beforehand revealed a tax information in addition to an inventory of helpful tax instruments for crypto house owners.

What do you consider the Danish tax company sending out warning letters to 20,000 crypto merchants and the way it was licensed to acquire data from native crypto exchanges? Tell us within the feedback part beneath.

Disclaimer: This text is for informational functions solely. It’s not a suggestion or solicitation of a suggestion to purchase or promote, or as a advice, endorsement, or sponsorship of any merchandise, companies, or corporations. Bitcoin.com doesn’t present funding, tax, authorized, or accounting recommendation. Neither the corporate nor the writer is accountable, straight or not directly, for any injury or loss triggered or alleged to be attributable to or in reference to using or reliance on any content material, items or companies talked about on this article.


Photographs courtesy of Shutterstock.


Do you know you should buy and promote BCH privately utilizing our noncustodial, peer-to-peer Native Bitcoin Money buying and selling platform? The native.Bitcoin.com market has hundreds of individuals from all all over the world buying and selling BCH proper now. And in case you want a bitcoin pockets to securely retailer your cash, you’ll be able to obtain one from us right here.

Tags on this story
Bitcoin, BTC, crypto, crypto property, crypto house owners, crypto merchants, Cryptocurrency, danish, Denmark, Digital Asset, Digital Foreign money, submitting, Submitting Taxes, IRS, Skattestyrelsen, Digital Foreign money

Kevin Helms

A pupil of Austrian Economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His pursuits lie in Bitcoin safety, open-source methods, community results and the intersection between economics and cryptography.




Supply hyperlink