SKAT plans to adjust tax documents for cryptocurrency trades made from 2016 to 2018.
Skattestyrelsen (SKAT), Denmark’s tax agency, has been authorized by Skatterådet, the country’s tax council, to examine three domestic crypto exchanges, according to a January 14 press release. SKAT plans to use the information it finds to make sure that Danes who have traded using these platforms have paid the correct taxes on cryptocurrency gains and losses.
This authorization allows SKAT to obtain identifying information from the three unnamed exchanges, including trader names, addresses, and tax information. SKAT also asked the Danish exchanges in question to turn over details of all crypto transactions made on their platforms between January 1, 2016 to December 31, 2018.
This is the first time SKAT has been given this level of access to the Danish exchanges. Karin Bergen, the directorate of SKAT, said, “This gives us completely new opportunities in relation to control in the area … Without going too far, I think you can say that this is a big market that we need to look into … [and] we now have the opportunity to uncover even more.”
Skatterådet explained that Danish exchanges are not legally required to report any trade or exchange information to SKAT. The request was made because the council determined that the information is “crucial” to ensuring regulatory compliance in Denmark with respect to cryptocurrency taxes.
The decision was made in the wake of a December 2018 investigation into 2,700 Danish individuals who traded bitcoin on a Finnish crypto exchange from 2015-2017 and failed to include any profits or losses on tax documents.
At the time, there was significant pushback against the investigation. Danish lawyer Payam Samarghandi argued that because Skatterådet found in 2014 that cryptocurrencies “have almost no link to the real economy,” the profits were not taxable. Louise Schack Elholm V, a member of the Danish Parliament and the Liberal Party’s tax rapporteur, disagreed, arguing that cryptocurrencies were taxable if they were speculative purchases – purchases made with the goal of profiting from short-term fluctuations in the market.
How SKAT will handle the taxation situation isn’t entirely clear. Bergen noted that it’s still too early to tell how many Danish traders were involved and how much was traded.
Based on the information obtained from the crypto exchanges, the first tax adjustments are expected to be issued before summer 2019.
Nicholas Ruggieri studied English with an emphasis in creative writing at the University of Nevada, Reno. When he’s not quoting Vines at anyone who’s willing to listen, you’ll find him listening to too many podcasts, reading too many books, and crocheting too many sweaters for his dogs, RT and Peterman.
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