Poland Crypto Tax Guide 2023
Curious about crypto taxation in Poland? Explore our comprehensive guide for 2023 and navigate the ins and outs of crypto taxes hassle-free.
Curious about crypto taxation in Poland? Explore our comprehensive guide for 2023 and navigate the ins and outs of crypto taxes hassle-free.
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Are you an ardent crypto enthusiast or someone who wants to be one, but the very thought of crypto taxes intimidates you? Don’t worry you’re not alone, thousands of Norwegians share the same line of thought. Crypto being a new asset class is hugely unregulated across markets in the world and the taxation of such assets is barely talked about even in the crypto space. Therefore, it is no surprise that people barely know how such transactions are taxed.
So we took it upon ourselves to create this comprehensive crypto tax guide for Norway residents so that the prospect of crypto taxation is not as intimidating. So that people can clearly understand their tax liabilities and pay their taxes properly. This guide has everything you need to know about crypto taxation in Norway and it will be regularly updated to accommodate any new regulations issued by the Skatteetaten.
So let’s get into it…
09/06/23 - Updated to accommodate DAO, gifts and donation taxes
09/06/23 - Updated to accommodate ICO taxes
Skatteetaten doesn’t consider crypto to be a form of currency and instead categorizes it as a form of capital asset. This essentially means any capital gains or income you make from crypto assets is taxable. Since Norway doesn’t have a dedicated capital gains tax, all your gains or income will be taxed as income at a flat rate of 22%.
Furthermore, if your total wealth surpasses 1,700,000 NOK, the province and states you reside in may impose a Wealth tax on any crypto assets you possess. The amount of tax you are required to pay is determined by the total value of your assets as of January 1st annually.
Your net wealth is calculated using the following formula:
Net Wealth = Total Value of Assets - Any Deductible Debt
If you wish to get into the details of how wealth calculations work in Norway, you can visit this link here to know more.
Consider the following ledger of transactions:
12/02/2022 - Lucy buys 1 BTC for 1,80,000 NOK
15/04/2022 - Lucy buys 10 ETH for 14,000 NOK each
02/05/2023- Lucy sells 1 BTC for 2,00,000 NOK
05/06/2023 - Lucy sells 5 ETH for 18,000 NOK each
For this example’s sake let’s assume that Lucy already has 1,800,000 worth of assets in her portfolio and a 3,00,000 NOK debt before she was involved in any of the following transactions.
Now there were two disposals made by Lucy, so let’s calculate the capital gain/loss incurred from these disposals.
1 BTC sold for 2,00,000 NOK
This BTC was acquired for 1,80,000 NOK
Capital Gain = Disposal amount - Cost basis = 2,00,000 - 1,80,000 = 20,000 NOK
5 ETH tokens sold for 18,000 NOK each
Now these are the same tokens that were acquired for 14,000 NOK each on 15/04/2022
Capital Gain on 1 ETH disposal = Disposal amount - cost basis = 18,000 - 14,000 = 4,000 NOK
Total Gain for 5 ETH tokens = 5 * 4,000 = 20,000 NOK
Collective Gain for both disposals = 20,000 + 20,000 = 40,000 NOK
That’s the final amount you’ll pay income tax on.
Now, it’s time to calculate Lucy’s wealth to see whether she owes any wealth tax to the authorities.
Of course, the example assumes that Lucy didn’t make any other transactions for the entire year, except for the ones mentioned above.
Now Lucy has 5 ETH left that she didn’t sell, so that must be added to the total assets.
(Assuming the value of 1 ETH token at the time of calculations to be 20,000 NOK)
Total assets = 1,800,000 + 1,00,000 = 1,900,000 NOK
Net Wealth = Total value of Assets - Deductible Wealth = 1,900,000 - 3,00,000 = 1,600,000 NOK
Since Lucy’s net wealth is less than 1,700,000 NOK, she is not required to pay any wealth tax.
Yes, Skatteetaten can track your crypto transaction. It has various means to obtain your financial data and ensure that you are adhering to tax regulations. Hence, if you were contemplating omitting certain transactions to reduce your tax bill, we advise you to abandon the idea and instead report all your transactions to Skatteetaten. Below are some channels that provide access points for taxpayers' cryptocurrency transactions to Skatteetaten:
The Norwegian tax administration doesn't consider crypto to be a form of currency and views it as a capital asset from a tax perspective. So if a person buys a crypto asset and later sells it for a profit, then it will be considered as a capital gain. However, Norway doesn't have a dedicated capital gains tax, and any gains incurred from the disposal of crypto assets are subject to income tax.
The following transactions can result in a capital gain according to the Skatteetaten:
As discussed in the above section there is no capital gains tax in Norway, instead, all capital gains are taxed as income and are subject to a flat 22% income tax. The calculation of this rate is based on the aggregate value of cryptocurrencies held as of the first day of the tax year being assessed. It's important to note, however, that if an individual's monthly income surpasses 14,541 NOK or their annual income goes beyond 174,500 NOK, a progressive bracket tax will be imposed.
The income tax structure in Norway consists of a base rate (alminnelig inntekt) of 22%, which applies to the majority of taxpayers. However, residents of Finnmark and Nord-Troms benefit from a reduced rate of 18.5%. Additionally, Norway implements a progressive tax system known as the step tax (trinnskatt), often referred to as the bracket tax, which operates on four distinct levels as outlined below.
Initially, the first 198,349 NOK of personal income is exempt from step tax. Subsequently, a 1.7% step tax is levied on the income bracket ranging from 198,350 NOK to 279,149 NOK. Beyond that, a 4% step tax is applicable to the income bracket spanning 279,150 NOK to 642,949 NOK. However, for incomes between 642,950 NOK and 926,799 NOK, individuals are subject to a 13.5% step tax, which is reduced to 11.5% for residents of Finnmark and Nord-Troms.
Furthermore, an income bracket of 926,800 NOK to 1,499,999 NOK is subject to a 16.5% step tax. Finally, any earnings exceeding 1.5 million kroner are taxed at a rate of 17.5%.
Capital gains or losses are calculated according to the following formula:
Capital Gains = (Gains incurred from disposal) - (Cost Basis)
And evidently, it’s a two-step process.
To streamline your crypto tax reporting, the initial step entails determining the cost basis for each asset you have swapped, sold, or gifted within a given tax year. This involves summing up the acquisition cost along with any applicable fees (such as transaction fees or gas fees) incurred during the acquisition process.
Once you have successfully determined the cost basis, calculating your capital gains or losses becomes a straightforward process. Simply subtract your cost basis from the disposal amount. If the result is positive, it signifies a gain and is subject to a flat income tax rate of 22%. Conversely, if the result is negative, it represents a loss. While no tax liabilities arise from losses, it is essential to actively track and report all losses to Skatteetaten. Doing so allows you to leverage them for reducing your overall tax bill effectively.
Consider the following transactions:
03/02/2022 - David buys 0.5 BTC for 80,000 NOK
06/04/2022 - David buys 3 ETH for 15,000 NOK each
05/06/2022 - David buys 1 BTC for 1,70,000 NOK and 2 ETH for 16,000 NOK each
13/06/2022 - David sells 1 BTC for 1,80,000 NOK
19/08/2023 - David sells 3 ETH for 19,000 NOK each
Now a total of two disposals were made by David during the year. So let’s calculate the gain for each disposal one at a time:
David sells 1 BTC for 1,80,000 NOK.
Note that we will be using the FIFO accounting method as recommended by Skatteetaten. We have discussed accounting methods in more detail later in the guide. For now, a simple way to understand how FIFO (First-In-First-Out) method works is to just assume that the first asset you buy is the first one you sell.
Now, there are two different types of BTC in this transaction.
BTC-1, acquired on 03/02/2022 for 80,000 NOK and BTC-2, acquired on 05/06/2022 for 1,70,000.
Cost Base for BTC-1 = 80,000 NOK for 0.5 BTC
Disposal Amount = 85,000 NOK for 0.5 BTC (1 BTC was sold for 1,80,000)
Capital Gain for BTC-1 = 90,000 - 80,000 NOK =10,000 NOK
Similarly, BTC-2 was acquired for 1,70,000 NOK (85,000 NOK for 0.5 BTC)
Capital Gain for BTC-2 = 90,000 - 85,000 NOK = 5,000 NOK
Total Gain = 10,000 + 5,000 NOK = 15,000 NOK
3 ETH sold for 19,000 NOK each.
If we use the FIFO accounting rules, these ETH tokens are the same ones that were acquired on 06/04/22 for 15,000 NOK.
Cost Base = 15,000 NOK
Disposal Amount = 19,000 NOK
Capital Gain for 1 ETH = 19,000 - 15,000 NOK = 4,000 NOK
So for 3 tokens, the total gain comes out to be = 3*4,000 NOK = 12,000 NOK
Total Gain for both disposals = 15,000 + 12,000 NOK = 27,000 NOK
In Norway, taxpayers can offset capital losses against capital gains or other taxable income incurred in the same fiscal year. If the total amount of capital losses exceeds the aggregate amount of capital gains in a particular year, the excess can be carried forward and applied as a tax deduction for up to 10 years.
It is important to note that only capital losses from the sale of assets that would have generated taxable gains are eligible for deduction. Moreover, the tax deduction for capital losses is subject to certain limitations. For instance, the maximum amount that can be deducted in a tax year is the lower of 10,000 NOK or 10% of the taxpayer's total taxable income.
You should maintain accurate records of your capital gains and losses and consult with a tax professional or the Norwegian Tax Administration for guidance on the rules and limitations regarding the use of capital losses as a tax deduction.
Taxpayers in Norway may claim a tax deduction on lost or stolen crypto under certain conditions. The taxpayer must provide evidence that the loss resulted from theft or embezzlement and that a police report has been filed.
It is important to note that the Norwegian tax authorities will require proof to support the deduction claim. This may involve submitting a police report or other relevant documents to support your claim, and the tax authorities may carry out their investigation to confirm the loss.
Moreover, the amount of the tax deduction may be subject to certain limitations or restrictions, and the specific circumstances surrounding the loss may also influence the tax deduction available.
The Norwegian tax authorities offer some legal gateways to reducing your tax bill and here’s what you need to know about them:
Every Norwegian resident is offered a basic deduction on any form of income including general income, business income, capital gain, or interest income. For the 2023 tax year, it’s set at NOK 79,600.
However, it’s important to note that this allowance is significantly reduced when staying/living in Norway for only parts of the year.
You can use your capital losses to offset your gains and reduce your tax bill. This has been thoroughly discussed in the section titled “Crypto Losses”.
You can deduct up to NOK 40,000 from your taxable income for pension savings.
If you have children under the age of 12, you can deduct up to a certain amount for childcare expenses. For the 2022 tax year, the maximum deduction for childcare expenses is as follows:
This means that if you have one child under the age of 6 and you have spent 30,000 NOK on childcare during the tax year, you can deduct 25,000 NOK from your taxable income.
In Norway, the accounting method used for cost basis calculations is the FIFO (First-In, First-Out) method. This means that when you sell your crypto assets or any other asset for that matter, the cost basis of the asset sold is calculated based on the price and date of the oldest asset you possess.
For example, if you purchased 100 ETH tokens for NOK 2,000 per token on January 1, 2020, and then purchased an additional 100 ETH tokens for NOK 2,100 per token on January 1, 2021, the cost basis for the first 100 tokens sold would be NOK 2.000 per token, and the cost basis for the second 100 tokens sold would be NOK 2,100 per token.
Note that the FIFO method is the default method used in Norway, but there are other methods available, such as the LIFO (Last-In, First-Out) method and the HIFO method. However, these methods require specific approval from the tax authorities and are generally only available to certain types of businesses or taxpayers.
Here’s how some of the other accounting methods work:
Individuals holding cryptocurrencies may be subject to the wealth tax imposed by their municipality and state, as the value of their crypto assets is taken into account when calculating their net wealth as of January 1st of each year. In other words, owning cryptocurrencies can impact an individual's overall net worth and potential tax liabilities.
Your net wealth is calculated using the following formula:
Net Wealth = (Total Value of Assets) - (Deductible Debt)
Your net wealth is taxed based on your Tax Class and Net Asset Threshold as mentioned below:
Not all crypto transactions are taxable in Norway. Here are some transactions that are considered non-taxable by the Norwegian tax authorities:
Listed below are some of the transactions that attract tax liabilities according to the Skatteetaten:
If you have earned any income from mining activities or received mining rewards you’re liable for income tax. Moreover, it is mandatory to declare the value of your mining earnings in NOK at the time of token receipt, and you should maintain records of the NOK market value of that time for each token.
“Mining of virtual currency means that you receive virtual currency in return for verification activity. Mining usually requires computing power for the method ‘Proof of Work’ to verify transactions on the blockchain and to extract virtual currency.”
You may claim deductions for expenses like equipment, software, and electricity, with an annual depreciation of 30%. Furthermore, if you’re involved in a cooperative mining operation, you must distribute the deductions equally amongst all participants.
Although mining and staking are different in the way they add and validate new blocks of transactions on the blockchain, they’re treated the same from a tax perspective. Staking rewards are taxed as regular income similar to mining rewards and you need to report these transactions to the tax authorities to steer clear of any tax complications.
While margin and futures trading in cryptocurrencies can yield higher profits, it also entails greater risk. Presently, there is no official guidance on how such activities are to be taxed in Norway.
However, you can use the established regulations on margin, futures, and derivatives trading in conventional financial markets as a reference which explicitly states - any gains or losses arising from such trades are treated like regular income and will be subjected to income tax.
Receiving crypto as a gift in itself is not a taxable event in Norway, you only pay taxes when you dispose of the gifted assets by selling or swapping them. Note that gifted assets inherit the cost base equal to the acquisition cost paid to acquire these assets by the gifter.
As far as gifting crypto is concerned, there are no clear guidelines on whether tax exemptions can be claimed on gifted assets. Crypto donations are in the same boat as well, because Skatteetaten is yet to release any guidelines on the matter. However, if we assume crypto donations to be similar to fiat donations, you can claim a tax deduction if certain criteria are met.
You can access a list of all approved organizations here. Note that you should never fill your donations yourself in the tax return, if your donations are not pre-filled you can contact the organization to report the donation on your fødselsnummer or birth number.
According to Norway's taxation guidelines NFTs are classified as virtual assets and are subject to the same tax regulations as other virtual assets. Although there are various use cases for NFTs, they are all treated as assets and are subject to the following tax treatment.
Minting an NFT may be subject to income tax if the smart contract involved in the process burns crypto assets for minting the NFT on-chain, as this would result in a realization. However, minting an NFT without disposing of any assets, which may be the case with free mints, does not attract any tax liabilities.
Note: Realization typically refers to the conversion of an asset into cash or other forms of value, such as securities or goods.
When selling an NFT, the transaction is considered a realization and therefore, attracts income tax.
Skatteetaten is yet to release guidelines on the taxation of income received from DAOs, however, from what we can extrapolate from the existing guidelines, it will be viewed the same way as income from other sources like staking, mining, and airdrops.
We do suggest seeking advice from an experienced tax accountant for transactions concerning DAOs to avoid legal complications in the future.
ICOs are events that allow you to receive tokens from an unreleased project at a discounted price. It functions in a similar way as IPOs in the traditional securities market, you use mainstream tokens like BTC and ETH to fund the project and receive native tokens in return.
ICOs are viewed the same way as crypto-to-crypto trades from a tax perspective, you are taxed on the disposal of mainstream tokens like BTC and ETH at receipt and you pay taxes again when you decide to dispose of these assets. Note that the new tokens received inherit the cost base equal to the FMV of these tokens at the point of receipt i.e. the price you paid using mainstream tokens.
If you’re engaging in financial activities on a decentralized platform, also known as DeFi, it is crucial to be aware of the tax implications. While many countries, such as the USA and Germany, have not yet provided clear guidelines on DeFi taxes, taxpayers always take caution to avoid any potential issues.
Fortunately, in Norway, Skatteetaten has issued guidelines regarding DeFi transactions, which offer a detailed insight into the tax treatment of DeFi transactions.
Skatteetaten has split virtual currencies into seven categories, each with different subcategories for incoming and outgoing transactions. It's important to understand when you've "realized" a cryptocurrency, which means you've transferred ownership in exchange for payment and stopped owning it.
If you're involved in decentralized finance (DeFi) transactions, you need to keep records of your realizations and pay income tax. Moreover, you must figure out whether you've made a profit, loss, or income from your DeFi transactions. Norway has some specific rules for DeFi that are different from other countries.
Here are a few examples:
Airdrops are typically regarded as gifts offered by either the blockchain or token holder. And although airdrops are generally small or negligible in value, you are liable for income tax. In some cases, the value of an airdrop at the time of acquisition may be zero, and if so, you can assign a zero acquisition cost. Moreover, you will still be liable to pay income tax when you sell the received assets.
Similar to airdrops, hard forks are also considered as income at the time of receipt. If there is no market value available for the received currency, you may set the acquisition cost to NOK 0. However, you will still be required to pay taxes upon the disposal of the received assets.
The deadline for reporting cryptocurrency taxes in Norway usually falls on April 30th. However, taxpayers may be given an extension because April 30th lands on a weekend which means this year, the deadline will be extended to May 2nd. If you’re a prior taxpayer or have filed tax earlier, you will receive an email notification containing your preliminary tax return information between March 14th and March 31st.
Deadline Extention To May 2nd due to the Weekend (if possible create a new image)
If you are a crypto trader or investor in Norway, you must know how to report your crypto taxes. Fortunately, Skatteetaten has simplified the process and made it more convenient with its online tax portal.
You can submit your taxes online or by mail, depending on your preference and you need to submit your wealth, capital gains, and income tax together. If you have any questions regarding taxes or if you need assistance, you can contact Skatteetaten between 9:00 and 15:00 on weekdays.
Living outside Norway? No problem.
Dial +47 22 07 70 00 or 800 80 000, and the Norwegian tax authority is at your service guiding you through all the steps of your crypto taxation. Moreover, Skatteetaten offers a video guide on how to file your crypto taxes, which might be helpful for you if it’s your first time filing crypto taxes.
Our guide will primarily cover how to file your crypto taxes online in Norway. If you choose to use Skattetaten's online platform, follow these steps to ensure a hassle-free process and avoid potential tax complications down the line:
Option 1: If you wish to enter information for each cryptocurrency
Option 2: If you wish to enter aggregated tax information for many virtual currencies/cryptocurrencies
After entering your information with either option, scroll down to "Årsak til endring/nye opplysninger" (reason for the change/new information), tick the box "Lagt til opplysninger som manglet" (Added information that was missing), and click "Ok". After you click “Ok”, you have successfully submitted your crypto tax return to Skattetaten.
However the process may seem cumbersome, there's no need to worry. You can sign up for online platforms like Kryptoskatt which can simplify the procedure by offering step-by-step guidance, identifying potential deductions and credits, and facilitating the direct e-filing of your tax return with Skatteetaten.
Skatteetaten would ask you to maintain sufficient documentation to substantiate the positions taken on your tax returns. Some of these documents are as follows.
Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptoskatt can make this task easier for you:
If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.
Although there is no legal way to avoid crypto taxes entirely, the Norwegian tax authorities do offer some legal gateways to lower your tax bill:
1. Is crypto legal in Norway?
Yes, cryptocurrency is legal in Norway. The Norwegian government recognizes cryptocurrency as an asset and a means of payment. In 2019, the Norwegian Financial Supervisory Authority (FSA) issued new regulations that required cryptocurrency exchanges operating in Norway to register with the FSA and comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Additionally, cryptocurrency mining is also legal in Norway, and there are no restrictions on individuals or businesses holding cryptocurrencies.
2. How is crypto taxed in Norway?
Crypto transactions are considered taxable by the Skatteetaten and are subjected to two separate classes of tax. The first is income tax and the second is a wealth tax. Any gains or income that you make as a result of crypto transactions is taxed under the income tax laws and your crypto assets are considered in your net wealth calculations and therefore attract a marginal wealth tax as well. This has been thoroughly discussed in the above sections of the tax guide.
3. Do you have to pay taxes on buying crypto in Norway?
No, buying crypto in itself is not a taxable event. However, if it involves the disposal of another asset, then it is most certainly a taxable event. In other words, buying crypto with fiat is not taxable, however, buying one crypto asset and making the payment with another is a taxable event.
4. How to file crypto taxes using Kryptoskatt?
We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a step-wise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. Although there’s an easy way to file your crypto taxes using a crypto tax software called Kryptoskatt.
Where all you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptoskatt does all the heavy lifting for you. The platform can auto-fetch all your transaction from the tax year and generate a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.