Denmark’s Tax Agency Authorized To Collect Data Regarding Cryptocurrency Transactions

Denmark’s Trade Council has authorized Danish tax authorities to investigate cryptocurrency related transactions. Officials can now collect info related to cryptocurrency transactions from crypto exchanges. The objective of the move is to track cryptocurrency transactions and make sure that traders trading in them pay the right taxes.

In an official statement, Skattestyrelsen, Denmark’s tax collection agency said that it now has the authority to collect data related to transactions conducted between Jan 1, 2016, and Dec 31, 2018, from three Danish exchanges.

The three exchanges are now required by the law to share info about all cryptocurrency related purchases and sales made by traders during the specified period. The exchanges will have to provide detailed customer info such as their addresses, names, and CPR numbers, the ID numbers issued by the country’s Civil Registration System.

Authorities at Skattestyrelsen say that they will use the info to ensure tax compliance. Karin Bergen, the tax authority’s director, says that the ruling will open new opportunities for the body to regulate the cryptocurrency exchange market.

The decision to empower Skattestyrelsen was taken after a board meeting of the Tax Council in last December. The decision came on the heels of Finnish tax authorities sharing info with their Danish counterparts regarding Danish traders who were trading cryptocurrencies on a Finnish exchange.

According to some reports, last year Finnish authorities had tipped off their Danish counterparts that around 2,700 Danish nationals were trading on a Finnish cryptocurrency exchange. The total trade volume was estimated to be close to $15 million.

In addition to ensuring tax compliance, Danish authorities plan to share info related to cryptocurrency transactions conducted by foreign nationals on Danish exchanges with tax bodies in the respective countries.

Currently, Skattestyrelsen is holding talks with crypto exchanges to design a framework for sharing info in a timely fashion. Once, they collect data, authorities intend to make sure every citizen dealing in cryptocurrency had paid the right taxes.

It is expected that Skattestyrelsen will adjust the tax base for traders before summer. Authorities plan to investigate every case to determine whether the income gained from a particular cryptocurrency transaction is taxable.

To increase awareness, Danish tax authorities launched a campaign last month. The focus of this campaign was to inform taxpayers about their obligations and the deductions.

This is not the first of its kind attempt by a tax-body to detect tax evasions related to cryptocurrency transactions. In 2017, the IRS too had come up with a similar move, demanding that Coinbase share info related to its 500,000 users.