The Denmark tax agency, the Skattestyrelsen or SKAT, requests from all of the traders to provide a full background of all of their crypto transactions according to the latest reports that we have in our crypto news.
The users have already started receiving letters from the Denmark tax agency and in the letters, SKAT asked the crypto users to provide information about profits and losses for the fiscal years of 2016 and 2018 according to the First in First Out principles. These principles represent a method of inventory valuation since all of the goods are sold or used in the same order in which the consumers initially purchased them.
Furthermore, the Danish tax agency for the rates used for each transaction, information on the purpose of acquiring the digital currencies and documentation regarding the entire process of creating a crypto wallet. In terms of the exchange services, SKAT requests all of the crypto users to reveal the confirmation of the trading activity in the form of a screenshot where there can be seen the full name of the individual and the agreement on the creation of an account. In addition to that, Skat aims to examine the crypto consumers’ account statements from the bank accounts in the previous period. The founder of the crypto tax startup Koinly, Robin Singh commented:
“Many of our Danish users have received these letters, Skat is asking for a full breakdown of all their transactions and asking them to fix all past reports as well. Filing tax on cryptocurrency trades is a difficult task as crypto traders usually hold several exchange accounts & wallets and freely transfer crypto between them, so there’s no easy way to figure out what the capital gains are for any particular trade.”
Skat mostly focuses on the crypto consumers’ transactions in 2018 when it confirmed it was identifying more than 2,700 individuals that owed taxes on their BTC gains. The agency intended to go after each one of the users that avoided their payment obligations. Skat stated at that time:
“If something does not match, we will contact them and ask for more information. However, how many people it is and what it may mean, it is still too early to say.”
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