Danish Tax Agency Accesses Crypto Exchange Data to Tax Traders

January 22

On Jan. 14, 2019, Danish tax agency Skattestryrelsen received authorization from the nation’s tax council to collect two years of cryptocurrency trading information from three Danish crypto exchanges to ensure that its citizens have paid correct taxes.

The three exchanges must now provide the tax agency with information on all purchases and sales of cryptocurrencies – including Bitcoin – made by their customers during the period from Jan. 1, 2016 through Dec. 31, 2018. Customer data must include names, address, central person registration numbers, and possibly other data.

The tax agency’s personal tax director, Karin Bergen, stated that the access will provide the Danish regulator new opportunities to assert control over cryptocurrency trading.

The decision to require the information came after the tax agency received trading information in October 2018 from a Finnish Bitcoin exchange, which provided insight into the market. The Finnish tax authorities handed over information on about 2,700 Danes trading Bitcoin in transactions worth more than an estimated DKK 100 million from 2015 through 2017.

The first tax change notices for traders based on new information collected from the three Danish crypto exchanges will likely be sent before summer. Any changes will clarify whether a cryptocurrency trade must be included in an individual or entity’s taxable income.

In general, the Danish tax council released an April 2018 determination that requires individuals to report profit or loss when buying and selling cryptocurrency. The transactions are regarded as speculation, and instructions for financial contracts must be followed.

Ansley is a derivatives attorney in the Firm’s Global Derivatives and Hedge Fund practice. She regularly advises clients on a broad array of regulatory, transactional and enforcement matters involving the financial markets and financial products. Prior to joining Baker McKenzie, Ansley served in the general counsel department of the National Futures Association, where she advised on regulatory matters related to futures, forex and swaps, including provisional registration reviews of US and non-US swap dealers.
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David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.

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