Cryptocurrency in Norway – Bitcoin tax return

TAXATION OF HOLDING, MINING AND TRADING CRYPTOCURRENCIES IN NORWAY

If you invest in and trade cryptocurrencies, you are probably wondering how to report them for tax purposes. Please read this post, which I hope will help you correctly account for cryptocurrency transactions.

📌 Cryptocurrencies are treated as assets/income, so they are reported at the end of each year. Their value is determined based on the exchange rate in Norwegian kroner on 1 January of the year following the income year. All of the rules below apply both to Bitcoin and to other cryptocurrencies such as Ethereum, IOTA, Litecoin, Stellar, Dogecoin, etc.

❓ How do you calculate a gain or loss?

A gain or loss is calculated based on the difference between the opening and closing value, that is:

• Opening value – the amount we invested in holding, for example, Bitcoin, including transaction costs,
• Closing value – the amount we receive from an increase in value, for example in USD, or from a sale, after deducting transaction costs.

In the case of exchanging one cryptocurrency for another, the loss or gain is determined based on their value at the time of the transaction in Norwegian kroner.

❓ So how do you report it?

Cryptocurrencies you hold, as well as gains, losses and mining, must be included in your annual tax return. The easiest way will be to use our help with the annual tax return: https://efremtid.no/rozliczenie-roczne-prywatne/, where, in addition to cryptocurrency gains, we will also report your other income 🙂

If you want to do it yourself, then depending on your situation you need to do one of the following:

– Generally, if you hold cryptocurrencies on 31.12, you must report them in the tax return in point 4.1.10 “Formue andre finansprodukter”, as this affects the value of your assets, and wealth tax is paid on assets above 1.5 million kroner.

– The situation is different in the case of trading as well – first you calculate the difference between the sale price and the purchase price. When selling cryptocurrencies at a loss, you can claim a deduction, which you must report in point 3.3.13 “Tap andre finansprodukter”, or pay tax on the gain in the case of a profit, which you report in 3.1.13 “Gevinst andre finansprodukter”. The tax rate is 22% of the reported gains.

– If during the tax year you mined a certain amount of cryptocurrency, you must report its value in 3.1.12 “Annen inntekt”. The tax rate is 22% of the reported mining income.

📌 For example: you are a private individual, and in May 2021 you bought 3 bitcoins at 600 thousand kroner each. In July 2021 you sold 2 of them at 700 thousand kroner per BTC. On 1 January 2022 you hold 1 BTC and it is worth 620 thousand kroner.

So, you sold BTC for the equivalent of 1,400,000 NOK and you hold cryptocurrencies worth 620,000 NOK.

The gain (1,400,000 – 1,200,000 = 200,000 NOK) should be entered under column 3.1.13 “Gevinst andre finansprodukter” in the tax return, and the value of the electronic wallet (620,000 NOK) in 4.1.10 “Formue andre finansprodukter”.

❗️ Remember to keep documents related to the purchase and trading of cryptocurrencies, such as bank statements, mining reports or purchase records. You do not need to send them to Skatteetaten, but you will have to show them if asked. Failure to provide these documents may result in a financial penalty.

❓ What if I run a business related to cryptocurrencies?

If you run a business in which you also trade cryptocurrencies, the only thing you need to do is correctly book the transactions:

1. purchase – book as [1880] – other financial instruments 
2. sale – first of all, you must clear account [1880] – so as to offset the purchase price. Then, if it was a sale at a profit, book that profit (sale price minus purchase price) to account [8070] – other financial gain, and the loss to [8170] – other financial loss
3. mining – book mining at the current value under account [1420] – goods in production. Sale of mined bitcoins is handled in the same way as above, only using account [1420].

The typical contra account is the bank, since payments are received into a bank account. In efirma.no it is therefore a good idea to use the document type: card payment receipt.

✅ In summary:

1. Determine how many and what type of cryptocurrencies you hold.
2. Calculate the value of the assets held in kroner.
3. Enter everything in the tax return.
4. Enter the total of all sales (gains and losses) in the tax return.
5. Keep all documents related to the transactions and the virtual currencies themselves.

❓ Questions? Please feel free to comment on this post and share it – especially with other people dealing with cryptocurrency in Norway. If you have questions about taxes in Norway or would like to use my accounting services – please send me a private message

🙂 I provide authorised accounting services for companies regardless of size and industry, as well as personal accounting: tax card changes, benefits, official matters, annual tax returns, etc.

Source: https://www.skatteetaten.no/bedrift-og-organisasjon/rapportering-og-bransjer/bransjer-med-egne-regler/internett/skatt-mva-virtuell-valuta/