Norway Crypto Tax Guide 2024

Are you an ardent crypto enthusiast or someone who wants to be one, but the very thought of crypto taxes intimidates you? Don’t worry you’re not alone, there are thousands of Norwegians who share the same line of thought. Crypto being a new asset class is hugely unregulated across markets in the world and their taxation is barely talked about even in the crypto space. Therefore, it comes as no surprise that people barely know how their crypto transactions will be taxed.

So let’s get into it…

Crypto Gains Tax

The Norwegian tax administration doesn't consider crypto to be a form of currency and views it as a capital asset from a tax perspective. So if a person buys a crypto asset and later sells it for a profit, then it will be considered as a capital gain. However, Norway doesn't have a dedicated capital gains tax, any gains incurred from the disposal of crypto assets are subject to income tax.

Capital Gains Tax Rate Norway

As discussed in the above section there is no capital gains tax in Norway, instead, all capital gains are taxed as income and are subject to a flat 22% income tax. The calculation of this rate is based on the aggregate value of cryptocurrencies held as of the first day of the tax year being assessed. It's important to note, however, that if an individual's monthly income surpasses 14,541 Norwegian kroner or their annual income goes beyond 174,500 Norwegian kroner, a progressive bracket tax will be imposed.

Crypto Losses

In Norway, taxpayers can offset capital losses against capital gains or other taxable income incurred in the same fiscal year. If the total amount of capital losses exceed the aggregate amount of capital gains in a particular year, the excess can be carried forward and applied as a tax deduction in subsequent years, for up to 10 years.

It is important to note that only capital losses from the sale of assets that would have generated taxable gains are eligible for deduction. Moreover, the tax deduction for capital losses is subject to certain limitations. For instance, the maximum amount that can be deducted in a tax year is the lower of NOK 10,000 or 10% of the taxpayer's total taxable income.

You should ensure that they maintain accurate records of their capital gains and losses and consult with a tax professional or the Norwegian Tax Administration for guidance on the rules and limitations regarding the use of capital losses as a tax deduction.

Lost or Stolen Crypto

Taxpayers in Norway may claim a tax deduction on lost or stolen crypto under certain conditions. The taxpayer must provide evidence that the loss resulted from theft or embezzlement and that a police report has been filed.

It is important to note that the Norwegian tax authorities will require proof to support the deduction claim. This may involve submitting a police report or other relevant documents to support your claim, and the tax authorities may carry out their own investigation to confirm the loss.

Moreover, the amount of the tax deduction may be subject to certain limitations or restrictions, and the specific circumstances surrounding the loss may also influence the tax deduction available.

How to Calculate Crypto Gains or Losses

And evidently, it’s a  two-step process.

The first step is to calculate the cost basis for every asset that you’ve swapped, sold, or gifted during a tax year. Which simply amounts to adding up the cost of acquisition and any fees (transaction fees, gas fees) paid in the process of acquisition.

Once you’ve got that figured out, you can easily calculate your capital gains or losses by subtracting your cost basis from the disposal amount. If it’s positive then it’s gain and is subjected to a flat income tax rate of 22%, and if it’s negative then it’s a loss and while it attracts no tax liabilities, you should actively track all your losses and report them to the Skatteetaten to use them for reducing your tax bill.

Crypto Tax Breaks Norway

The Norwegian tax authorities offer some legal gateways to reducing your tax bill and here’s what you need to know about them:

1. Personal Tax Allowance

Every Norwegian resident is offered a basic deduction on any form of income including general income, business income, capital gain, or interest income. For the 2023 tax year, it’s set at NOK 79,600.

However, it’s important to note that this allowance is significantly reduced when staying/living in Norway for only parts of the year.

2. Tax-Loss Harvesting

You can use your capital losses to offset your gains and reduce your tax bill. This has been thoroughly discussed in the section titled “Crypto Losses”.

3. Pension savings

You can deduct up to NOK 40,000 from your taxable income for pension savings.

4. Childcare Expenses

If you have children under the age of 12, you can deduct up to a certain amount for childcare expenses. For the 2022 tax year, the maximum deduction for childcare expenses is as follows:

• NOK 25,000 per child under the age of 6
• NOK 15,000 per child between the ages of 6 and 12

This means that if you have one child under the age of 6 and you have spent NOK 30,000 on childcare during the tax year, you can deduct NOK 25,000 from your taxable income.

Crypto Cost Basis Method Norway

In Norway, the accounting method used for cost basis calculations is the FIFO (First-In, First-Out) method. This means that when you sell your crypto assets or any other asset for that matter, the cost basis of the asset sold is calculated based on the price and date of the oldest asset you possess.

Note that the FIFO method is the default method used in Norway, but there are other methods available, such as the LIFO (Last-In, First-Out) method and the average cost method. However, these methods require specific approval from the tax authorities and are generally only available to certain types of businesses or taxpayers.

Here’s how some of the other accounting methods work:

1. Last-In-First-Out- The first token you buy is the last token you sell.
2. Highest-In-First-Out- The most expensive token you buy is the first token you sell.

Crypto Wealth Tax Norway

Individuals holding cryptocurrencies may be subject to the wealth tax imposed by their municipality and state, as the value of their crypto assets is taken into account when calculating their net wealth as of January 1st of each year. In other words, owning cryptocurrencies can impact an individual's overall net worth and potential tax liabilities.

Your net wealth is calculated using the following formula:

Net Wealth = (Total Value of Assets) - (Deductible Debt)

Crypto Wealth Tax Rate Norway

Your net wealth is taxes based on your Tax Class and Net Asset Threshold as mentioned below:

Municipal Wealth Tax

State Wealth Tax

Tax-Free Crypto Transactions

Not all crypto transactions are taxable in Norway. Here are some transactions that are considered non-taxable by the Norwegian tax authorities:

• Lost/Stolen Crypto: Crypto assets that were stolen by phishing attacks, hacks, exchange frauds, or lost due to forgotten private keys are considered non-taxable and can even be used as tax-deductible in some instances.
• Transferring Crypto Between Wallets: Transferring crypto between your own wallets is a non-taxable event as long as you can prove ownership of transferred assets.
• Buying Crypto with Fiat: Buying crypto with fiat currency is a non-taxable transaction as it doesn’t involve disposing of an asset.
• Gifting Crypto: Gifting Crypto is a non-taxable event in Norway as there are no gift taxes. However, make sure you keep detailed records of the transaction including the gift’s origin.
• Donating Crypto: Donating crypto to a registered charity with no connections to you or your business is also considered a non-taxable event.

Taxed Transactions

Listed below are some of the transactions that attract tax liabilities according to the Skatteetaten:

• Sale of Crypto Assets: If you sell your cryptocurrencies at a profit, the profit is subject to capital gains tax. The tax rate is 22% for individuals and 25% for companies.
• Crypto Mining: If you mine cryptocurrencies as a business, the income from mining is subject to ordinary income tax. The tax rate is based on your personal income tax rate.
• Crypto Staking: If you earn staking rewards by holding crypto assets in a proof-of-stake network, the rewards are subject to ordinary income tax.
• Trading of crypto assets: If you trade crypto assets frequently, the profits are subject to ordinary income tax. The tax rate is based on your personal income tax rate.
• Using crypto assets to pay for goods and services: If you use crypto assets to pay for goods and services, the transaction is subject to value-added tax (VAT) at a rate of 25%.

When To Report Crypto Taxes in Norway?

How To File Crypto Taxes in Norway?

If you are a crypto trader or investor in Norway, you must know how to report your crypto taxes. Fortunately, Skatteetaten has simplified the process and made it more convenient with its online tax portal.

Living outside Norway? No problem.

Our guide will primarily cover how to file your crypto taxes online in Norway. If you choose to use Skattetaten's online platform, follow these steps to ensure a hassle-free process and avoid potential tax complications down the line:

1. Go to skatteetaten.no and scroll down to the "Finans" heading
2. Click on "Andre finansprodukter og virtuell valuta/kryptovaluta" and then "Virtuell valuta/kryptovaluta"
3. Check the box saying "Jeg vil legge inn opplysninger for hver enkelt" (I will enter information for each individual)
4. For each cryptocurrency, fill out the following information:
5. • Name of the cryptocurrency/digital currency
   • Amount owned on 31 December in the income year
   • Property value
   • Taxable gains
   • Deductible losses
   • Other taxable capital income (e.g., mining, staking, etc.)
   • Wallet address used for this currency

1. Go to skatteetaten.no and scroll down to the "Finans" heading
2. Click on "Andre finansprodukter og virtuell valuta/kryptovaluta" and then "Virtuell valuta/kryptovaluta"
3. Check the box saying "Jeg vil legge inn summerte skatteopplysninger for mange virtuelle valuta/kryptovaluta og må laste opp vedlegg som viser detaljer" (I want to enter aggregated tax information for much virtual currency/cryptocurrency and need to upload attachments showing details)
4. Upload a PDF file that shows your total wealth, gains, losses, and other capital income for the year, along with the exchanges and wallet addresses you have used
5. Fill out the following information:
6. • Property value
   • Taxable gains
   • Deductible losses
   • Other taxable capital income

Tax on Mining Crypto Norway

If you have earned any income from mining activities or received mining rewards you’re liable for income tax. Moreover, it is mandatory to declare the value of your mining earnings in NOK at the time of token receipt, and you should maintain records of the NOK market value of that time for each token.

What Skatteetaten says about mining:

“Mining of virtual currency means that you receive virtual currency in return for verification activity. Mining usually requires computing power for the method ‘Proof of Work’ to verify transactions on the blockchain and to extract virtual currency.”

You may claim deductions for expenses like equipment, software, and electricity, with an annual depreciation of 30%. Furthermore, if you’re involved in a cooperative mining operation, you must distribute the deductions equally amongst all participants.

Crypto margin trading, futures, and CFDs Norway

While margin and futures trading in cryptocurrencies can yield higher profits, it also entails greater risk. Presently, there is no official guidance on how such activities are to be taxed in Norway.

However, you can use the established regulations on margin, futures, and derivatives trading in conventional financial markets as a reference which explicitly states - any gains or losses arising from such trades are treated like regular income and will be subjected to income tax.

NFT Taxes Norway

Note: Realization typically refers to the conversion of an asset into cash or other forms of value, such as securities or goods.

De-Fi Crypto Taxes Norway

If you’re engaging in financial activities on a decentralized platform, also known as DeFi, it is crucial to be aware of the tax implications. While many countries, such as the USA and Germany, have not yet provided clear guidelines on DeFi taxes, taxpayers always take caution to avoid any potential issues.

Skatteetaten has split virtual currencies into seven categories, each with different subcategories for incoming and outgoing transactions. It's important to understand when you've "realized" a cryptocurrency, which means you've transferred ownership in exchange for payment and stopped owning it.

If you're involved in decentralized finance (DeFi) transactions, you need to keep records of your realizations and pay income tax. Moreover, you must figure out whether you've made a profit, loss, or income from your DeFi transactions. Norway has some specific rules for DeFi that are different from other countries.

Here are a few examples:

• If you swap or exchange cryptocurrency or tokens, it's considered a realization.
• The same goes for exchanging wrapped tokens, making deposits in liquidity pools, and receiving returns from those pools.
• Any income you receive from participation in the liquidity pool is taxable, even if it's not a change in value.
• Finally, if you receive a management token, it's considered income when you receive it, and any sale or exchange of that token is also considered a realization.

Can Skatteetaten track crypto?

Yes, Skatteetaten can track your crypto transaction. It has various means to obtain your financial data and ensure that you are adhering to tax regulations. Hence, if you were contemplating omitting certain transactions to reduce your tax bill, we advise you to abandon the idea and instead report all your transactions to Skatteetaten. Below are some channels that provide access points for taxpayers' cryptocurrency transactions to Skatteetaten:

• All prominent cryptocurrency exchanges are obligated to perform Know Your Customer (KYC) verifications for all users
• Anti-Money Laundering (AML) Regulations, mandate that exchanges and custodial wallets divulge specific details about their users to government entities.
• Skatteetaten may conduct an audit of the tax document you will provide to check any malpractice or unreported crypto transactions

What crypto records will the Skatteetaten want?

Skatteetaten would ask you to maintain sufficient documentation to substantiate the positions taken on your tax returns. Some of these documents are as follows.

• The market value of your crypto assets on the day of purchase
• The market value of your crypto assets on the day of sale
• A detailed record of all profits and losses
• Date and time of each transaction
• Proof of all sales and purchases
• Documentation of all transfers made between personal and external wallets

How are Airdrops and Forks Taxed in Norway?

Airdrops are typically regarded as gifts offered by either the blockchain or token holder. And although airdrops are generally small or negligible in value, you are liable for income tax. In some cases, the value of an airdrop at the time of acquisition may be zero, and if so, you can assign a zero acquisition cost. Moreover, you will still be liable to pay income tax when you sell the received assets.

Similar to airdrops, hard forks are also considered as income at the time of receipt. If there is no market value available for the received currency, you may set the acquisition cost to NOK 0. However, you will still be required to pay taxes upon the disposal of the received assets.

Frequently Asked Questions(FAQs)

1. Is crypto legal in Norway?
   Yes, cryptocurrency is legal in Norway. The Norwegian government recognizes cryptocurrency as an asset and a means of payment. In 2019, the Norwegian Financial Supervisory Authority (FSA) issued new regulations that required cryptocurrency exchanges operating in Norway to register with the FSA and comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Additionally, cryptocurrency mining is also legal in Norway, and there are no restrictions on individuals or businesses holding cryptocurrencies.

2. How is crypto taxed in Norway?

Crypto transactions are considered taxable by the Skatteetaten and are subjected to two separate classes of tax. The first is income tax and the second is a wealth tax. Any gains or income that you make as a result of crypto transactions is taxed under the income tax laws and your crypto assets are considered in your net wealth calculations and therefore attract a marginal wealth tax as well. This has been thoroughly discussed in the above sections of the tax guide.

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