Taxation of cryptocurrencies in Sweden
How cryptocurrencies are taxed in Sweden.
The Supreme Administrative Court, like the Tax Court, considers that bitcoin cannot be equated with a co-ownership or foreign currency. The sale of bitcoin must therefore be taxed in accordance with the provisions on other assets in Chapter 52. Income Tax Act, IL. Bitcoin can not be a so-called personal asset, which means that the overhead amount must be calculated according to the so-called the average method and that 70 percent of a loss may be deducted. Read more on rules & positioning
When should I declare my cryptocurrencies?
- sold cryptocurrency
- exchange a cryptocurrency for one or more other types of cryptocurrency
- exchange a cryptocurrency for a FIAT currency, eg USD, Kronor
- paid with cryptocurrency when buying a product (for example a pair of shoes) or a service (for example a taxi ride)
- lent out cryptocurrency
- use cryptocurrency as a gaming bet
You report this on Enclosure K4 under section D, which you submit together with your income tax return.
How you are taxed
If you have, for example, bought and sold cryptocurrency, you calculate your profit or loss as follows:
What you have paid (sales price)
- what you bought for (overhead amount)
= your profit or loss.
You who have made a profit are taxed for the whole profit. You pay 30 percent in tax on your profits. If you have made a loss, it is deductible to 70 percent.
Your overhead amount is normally the amount for which you purchased your cryptocurrency. But depending on how you obtained your cryptocurrency, the overhead amount is calculated in different ways.
You need to be able to prove the overhead amount with, for example, receipts or original account statements from exchange companies. If there have been wallet addresses, the transactions in the blockchain must be consistent with the reporting of purchases, mining and sales of the bitcoin.
If you have acquired or received cryptocurrency on several different occasions, you must calculate an average overhead amount. The standard method, which uses 20 percent of the sales price as an overhead amount, may not be used when reporting cryptocurrency.
Example - buying and selling cryptocurrency
In 2017, Anela bought bitcoin on two occasions. On October 12, she bought 0.5 bitcoin for SEK 20,000 and on November 12, she bought another 0.2 bitcoin for SEK 10,000. On October 16, 2020, she sold 0.4 bitcoin for SEK 40,000. Anela shall report the sale in K4 under section D.
She makes an average calculation on the help form SKV2198.
Anela can either report her sales in the e-service Income Statement 1 or on paper form K4 under section D.
Report on form K4 section D
Under Number / Amount in foreign currency, Anela fills in 0.4. As a designation, she indicates Bitcoin. She also fills in the sales price (SEK 40,000), overhead amounts (SEK 17,143) and profit (SEK 22,857). At the bottom of the form, she sums up the total amounts.
Accounting in the e-service Income tax return 1
In the e-service Income Declaration 1, Anela looks up K4 - Other securities, other assets (capital investments, eg commodities, cryptocurrencies), etc.
Anela indicates Bitcoin as a designation. She also fills in the sales price (SEK 40,000) and overhead amounts (SEK 17,143). The e-service then calculates her profit automatically.
There is no possibility to fill in decimals in the e-service. Anela therefore rounds to the nearest integer and puts 0 in the box for Number. Anela then writes under Other information that she sold 0.4 pieces of bitcoin.
Examples - purchase, sale, purchase of goods
Eva does not conduct any business and as a private individual has carried out a number of different purchases and sales of bitcoin as follows:
Eva buys 10 bitcoin for SEK 10,000 and then buys another 10 bitcoin for SEK 50,000. In total, she has bought 20 bitcoins for SEK 60,000 and each bitcoin thus has an average overhead amount of SEK 3,000 (SEK 60,000 ÷ 20).
Eva sells 15 bitcoin for SEK 60,000 and the overhead amount is SEK 45,000 (15 x SEK 3,000). The profit will thus be SEK 15,000 (60,000 - 45,000). The remaining overhead amount for 5 bitcoin is SEK 15,000.
Eva buys another 5 bitcoin for SEK 25,000. The total overhead amount is now SEK 40,000 for 10 bitcoin, which entails a new average overhead amount of SEK 4,000 for each bitcoin.
Eva buys goods on the internet for SEK 2,000 and pays with 0.345 bitcoin. Eva thus sells (sells) 0.345 bitcoin for SEK 2,000. The expense amount is SEK 1,380 (0.345 x SEK 4,000) and the capital gain is thus SEK 620 (2,000 - 1,380).
Eva sells 5 bitcoin for SEK 15,000. The average overhead amount is still SEK 4,000 per bitcoin. This leads to a capital loss of SEK 5,000 (15,000 - 20,000).
Eva reports a total capital gain on Enclosure K4, section D of SEK 15,620 (SEK 15,000 + SEK 620) and a capital loss of SEK 5,000. The capital gain is taken up to 100 percent and the capital loss is deductible to 70 percent. There is no set-off on Enclosure K4, section D. The Swedish Tax Agency automatically reduces the capital loss to SEK 3,500 (5,000 x 70 percent) before it is deducted from the capital gain when calculating the surplus capital.
Example - switching between different cryptocurrencies
Samira does not conduct any business and as an individual has invested in bitcoin. She has since exchanged her bitcoin for litecoin. Switching from one cryptocurrency to another means that she must make a capital gain calculation. Samira has previously bought 10 bitcoin for SEK 100,000 and she exchanges these for litecoin. Her overhead amount for the bitcoin she exchanged for will thus be SEK 100,000. The sale price will be the value in Swedish kronor of the litecoin that Samira received at the time of the exchange. Samira must report this in the income category capital in Enclosure K4, section D.
Example - buying and selling bitcoin (simplified accounting)
Eddie does not run a business and has traded with bitcoin as a private person.
Eddie has bought 2 bitcoin for SEK 128,000. His average overhead amount for each bitcoin will be SEK 64,000 (SEK 128,000 ÷ 2). Eddie will then sell 0.01 bitcoin in 2020 on two hundred different occasions. His overhead amount for each sale will be SEK 640 (SEK 64,000 x 0.01). Some of the sales have led to profits and some to losses.
Eddie does not have to report each sale separately. He sums up his total sales price and his total overhead amount for the profit transactions he has made. He then fills in the sales price and the overhead amount in Enclosure K4 under section D. The difference is reported as a profit. He also fills in the total number of bitcoin he sold with a profit rounded to the nearest whole number. He then sums up his total sales price and his total overhead amount for the loss transactions he has made. He then fills in the sales price and the overhead amount in Enclosure K4 under section D. The difference is reported as a loss. He also fills in the total number of bitcoin he sold with a loss rounded to the nearest whole number.
The profit is taken up to 100 percent and the loss is deductible to 70 percent. There is no set-off on Enclosure K4, section D. The Swedish Tax Agency automatically reduces the loss to 70 percent.
Here we have summarized various taxable events for which you are liable to pay tax. We at Kryptoskatt are not responsible for the Tax Agency rules regarding the taxable events not matching our information. This is not tax advice, we therefore ask you to contact the Skatteverket for more information with questions or concerns.
Sale of crypto
The sale of crypto is a taxable event and must be declared as a capital gain.
Trade crypto for crypto
To trade crypto for crypto or crypto for stack coins (TUSD → BTC eller BTC → TUSD) is a taxable event and is taxed as a capital gain.
If you have invested in bitcoin then switch your bitcoin to ethereum. Switching from one cryptocurrency to another requires you to make a capital gains calculation. Samira has previously bought 10 bitcoin for SEK 100,000 and she exchanges these for ethereum. Her overhead amount for the bitcoin she exchanged for will thus be SEK 100,000. The sale price will be the value in Swedish kronor of the ethereum that Samira received at the time of the exchange.
Initialt myntbjudande (ICO)
ICOs are taxed as sales. In case of successful sale, the overhead amount is the market value of the cryptocurrency that you used to participate.
Purchase of goods and services with crypto
Purchases of goods and services are taxed as sales and must be declared as capital gains.
The realized gain or loss is taxed as a capital gain when the position is closed.
If you realized a profit, the cost base profit is applied after you have paid the capital gains tax. In the event of a loss, it works in the same way as if you sold your crypto for SEK 0, the loss is equal to your crypto's average cost base.
Buying crypto is not taxed, however, it is important to keep track of the price of the cryptocurrency at the time of your purchase in order to later be able to calculate the correct overhead amount when selling.
Transfer crypto between your wallets
Transfers between different wallets do not need to be taxed. For your own sake, it is good to book your transactions. This will make it easier for you to calculate the overhead amount.
Lost or stolen crypto
Lost, hacked or stolen crypto is not taxed. If you have made a profit on your crypto, the profit is taxed regardless. You can therefore not compensate for lost or stolen crypto against your winnings. You remove the relevant cost base from your calculations.
Give / receive crypto as a gift
Giving away or receiving a crypto as a gift is not taxed. This also applies to donations, however, it must be taxed on sales.
Income from other activities (eg freelance)
Income from other activities such as work or a service must be declared as income tax. The cost basis for the crypto you received is the same value that you stated as income.
Rewards, Airdrops & Forks
Airdrops and Hardforks are counted as gifts and are not taxed. Only on sale should this be taxed and the cost amount should then be zero.
If you as an individual have income from mining bitcoin and other cryptocurrencies, you must pay tax on the income. They are normally taxed as income from employment (hobby) but can exceptionally be taxed as income from business activities.
Lending of crypto
Lending of a cryptocurrency is taxed as a sale and must be declared as a capital gain.
The interest is classified as income and must therefore be taxed as earnings. It is a bit unclear how it should be declared, in a conversation with the tax authorities we came to the conclusion that income from interest can be declared in the K4 form section D (see picture) and not in section 7.2 Interest income, dividends, profit from Enclosure K4 section C ( listed bonds, currency, etc.).
Loans against fiat
Borrowing FIAT currency, eg USD, Kronor, Euro in exchange for crypto is taxed as a sale and must be declared as a capital gain.
Closing your loan or taking back your crypto does not count as a taxable event and does not need to be declared.
Staking & staking rewards
Staking of a cryptocurrency is taxed as a sale and must be declared as a capital gain.
Staking rewardsis classified as an income and should therefore be taxed as a gain, just like the interest rate on a loaned crypto.
Ending your staking or taking back your crypto does not count as a taxable event and does not need to be declared.
Non-fungible token (NFT)
Buying NFTs is not taxed, however, it is important to keep track of the price of the NFT at the time of your purchase in order to later be able to calculate the correct overhead amount when selling.
Purchase of NFTs for crypto
To purchase an NFT with crypto (ETH → NFT) is taxed as a sale and must be declared as a capital gain.
Sale of NFTs
The sale of an NFT is a taxable event and must be declared as a capital gain.
Sale of NFT for crypto
The sale of NFTs for crypto is a taxable event and must be declared as a capital gain.
Sale of NFT for another NFT
A sale of NFT for another NFT is a taxable event and must be declared as a capital gain. It is important to keep track of the price of the NFT at the time of your purchase in order to later be able to calculate the correct overhead amount when selling.
Cryptocurrency in business
If you have received cryptocurrency as payment in your business, the subsequent change in value should normally be taxed as income from capital. However, this does not apply in businesses where the cryptocurrency is an inventory asset, for example if you run an external exchange business. In such cases, you must report the income as income from business activities.
Example - business
Olof sells goods in his web shop on the internet. He charges in bitcoin. Olof books each sale separately in Swedish kronor based on the value on the day he is paid in bitcoin. Since bitcoin does not constitute stocks in this type of business, Olof is considered to make his own withdrawal of bitcoin the moment he receives them.
In January, he booked sales income and VAT with a total of SEK 34,500 and during this period he received a total of 0.4 bitcoin, which he then takes out and then sells for SEK 36,000. This must be reported in the income category capital in Enclosure K4, section D. The sales price is SEK 36,000 and is reduced by the overhead amount that corresponds to the reported amount in the business, including VAT, ie SEK 34,500. The capital gain will be SEK 1,500.
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