What do you risk by not reporting cryptocurrency to the Tax Authority?

What can happen if I don’t include my crypto in my tax return or if there are errors?

If you do not provide information, or provide incorrect information, to the Tax Authority about income and assets, you risk that the Tax Authority:

• opens an audit case on you and obtains information about you from third parties
• determines taxable income and assets based on what the Tax Authority believes is correct (discretionary assessment)
• imposes additional tax on you

The most serious cases of tax evasion can also be reported to the police.

Audit case

If the Tax Authority wants to investigate whether you have had taxable income and/or assets that you have not declared in your tax return and paid tax on, the Tax Authority can open an audit case on you.

Who is audited can be selected automatically, according to specific risk criteria or following tips.

An audit case usually means that the Tax Authority conducts investigations and obtains information about you from third parties, e.g. other persons, banks, service providers etc. The Tax Authority can in principle require anyone to provide information about you, if this information may be relevant to your tax liability. However, there are some limitations regarding who the Tax Authority can request information from and what information they can obtain.

In an audit case, the Tax Authority will also contact you and ask you to provide information and possibly documentation about assets and income.

Change of tax

After the Tax Authority has reviewed the information that has been collected, the Tax Authority will make a decision about whether you have had income and assets that should have been taxed and how much this is in that case. The Tax Authority can thus change your tax for previous income years.

In addition, the Tax Authority will determine how the income should be taxed, e.g. whether it should be taxed as ordinary capital income or business income.

How far back can the Tax Authority change my tax?

The Tax Authority can as a general rule audit and possibly change your tax five years back in time.

If it concerns serious circumstances, and where the Tax Authority imposes aggravated additional tax (40% or 60%) or reports the matter according to the provisions on tax fraud, the Tax Authority can change your tax ten years back in time.

Additional tax and other penalties

If the Tax Authority believes that you have provided incorrect or incomplete information in your tax return and this has led to too low tax, you risk additional tax. This means that in addition to having to pay the tax you should have paid, you also have to pay additional tax.

The additional tax can be set at either 20% (ordinary additional tax), 40% or 60% (aggravated additional tax) of the tax that should have been paid.

The most serious cases of tax evasion/tax fraud can be reported to the police.

If the Tax Authority concludes that you should have paid more tax, and that you have provided incorrect or incomplete information, you often have to pay additional tax.

The “ordinary” additional tax is 20% of the tax that should have been paid. Aggravated additional tax is 40% or 60%.

Are there any exceptions from the rules about additional tax?

The Tax Authority cannot impose additional tax on you when there are “excusable circumstances” with you. “Excusable circumstances” can for example be illness or life crisis. That you do not familiarize yourself with relevant regulations is as a starting point not an excusable circumstance.

If the tax return becomes incorrect due to obvious calculation or typing errors, the Tax Authority cannot impose additional tax on you. For a calculation or typing error to be obvious, it must be so easy to see that a case handler at the tax authorities cannot avoid discovering it when he or she processes the return with ordinary accuracy. It is crucial that it can easily be established that something is wrong, and therefore it takes a lot for the tax authorities to consider a calculation or typing error as obvious. Accounting errors of a technical nature that do not qualify as “obvious calculation and typing errors,” but which can nevertheless occur unconsciously without the taxpayer or their assistant being blamed for it, may under the circumstances be considered an excusable circumstance.

The more professional and resourceful you are, the higher requirements the tax authorities will place on you.

Regardless, it is wise to have as thorough and reassuring quality assurance routines as you can around how you arrive at the information you provide in your tax return.