Denmark’s Tax Agency Targets Crypto Traders: What You Need to Know

The Hunt is On: Letters from Skattestyrelsen

In news that might make even seasoned cryptocurrency traders feel a tiny bit anxious, Denmark’s tax authority, Skattestyrelsen, has started sending out letters requesting detailed information from crypto users. It’s not a love letter; rather, it’s a grilling that includes requests for every transaction made between 2016 and 2018, all filed meticulously according to FIFO (First In First Out) principles. So, if you thought you could just shrug off your crypto activity as a phase, think again.

What They Want: The Data Dossier

The letters are not just gathered sparks of curiosity; they demand a mountain of information. Skattestyrelsen wants an overview of profits and losses, along with:

• The rates used for each transaction.
• The purpose of acquiring various digital currencies.
• Documents related to the creation of cryptocurrency wallets.

And if you thought you were done, there’s more! They also want confirmation of trading activities through screenshots that feature your name and evidence of account creation. Because what’s a little scrutiny among friends, right?

Your Bank Statements: Yes, Those Too!

As if the request for transaction details wasn’t enough to ruin your weekend, Skattestyrelsen is also interested in your bank statements for the same time frame. Robin Singh, the founder of cryptocurrency tax startup Koinly, shared that many Danish users find themselves in a sticky situation: “Filing tax on cryptocurrency trades is a difficult task…” So, grab those bank statements and sweat a little—it’s about to get real!

Why Now? A History of Scrutiny

This latest move is the beacon of Skattestyrelsen’s continued efforts to bring crypto users into the tax fold. Their crusade began last year when they disclosed they were combing through the records of 2,700 individuals thought to owe taxes on Bitcoin gains. Imagine receiving this kind of news just ahead of year-end—what a way to turn up the holiday stress!

Taking Notes from the IRS Playbook

Fun fact: Denmark is following the lead of the U.S. Internal Revenue Service (IRS) in this crackdown. The IRS famously sent out letters to 10,000 crypto investors regarding their tax obligations. In October, they went further, adding a swift question to the annual 1040 tax form about whether taxpayers engaged with virtual currencies at all. You know—just a casual ‘yes or no’ inquiry to stir the pot. No big deal!

As tax season approaches, it’s crucial for crypto enthusiasts in Denmark to be proactive. Prepare your documents, brace for potential back taxes, and remember: it’s always better to face the taxman with your receipts sorted than to be stuck playing catch-up later.