Report: Denmark’s Tax Agency Is Sending Tax Compliance Letters to Crypto Users
Ana Alexandre's original article for cointelegraph.com reduced by 76%
Denmark-based cryptocurrency users have begun receiving letters from the Danish tax agency, Skattestyrelsen, requesting that traders provide a full background of all their cryptocurrency transactions, sources informed Cointelegraph on Dec. 10.In its letters, Skat specifically asked crypto users to provide information about profits and losses for fiscal years 2016 to 2018, according to FIFO principles. Disclosure of crypto exchange services usedIn terms of crypto exchange services, Skat requested that crypto consumers revealed the confirmation of their trading activity in the form of a screenshot featuring the individual's name and an agreement on the creation of an account.
"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's first steps towards crypto user taxationSkat turned its focus to crypto consumers late last year when it confirmed that it was "Identifying" 2,700 individuals it said owed taxes on Bitcoin gains. At the time, the tax agency planned to make the first adjustments to tax treatment for specific cases based on the newly-acquired information before summer 2019.The amendments were set to include whether individual traders' or businesses' trades need to be included in their declared taxable income.
Following the U.S. IRS practiceSkat thus might follow the United States Internal Revenue Service's lead. The IRS sent letters to 10,000 crypto investors to clarify crypto tax filing requirements and, in certain cases, compel them to pay back taxes.
In October, the IRS added a question on crypto ownership to the standard 1040 income tax form for the coming tax season.
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