Tax regulations - virtual currency
All income from virtual currency is taxable. With regards to taxation, virtual currencies such as cryptocurrency, digital tokens and other digital assets are considered assets. Income from assets is considered capital income and is taxed at a rate of 22 percent.
Virtual currencies should be included in the calculation of net wealth tax with the market value as at 1 January in the year after the income year.
Virtual currencies fall under the general tax regulations for assets. They are not subject to exemptions and special tax rules that apply to regular currencies (FIAT), shares, bonds, financial instruments or other types of assets with special exemptions. This means, among other things, that the exemption method does not apply to virtual currencies, and that the factor for upwards adjustment for share income does not apply.
The tax treatment of virtual currencies must be considered for each product/service. The name of the product or service does not affect this assessment.
A return or expense can be considered interest, without it being interest income or interest expense with regards to taxation.
Realisation means transfer of ownership rights in exchange for payment and cessation of ownership rights. Typical examples of realisation are sales or exchanges. For example, if you sell virtual currency and receive settlement in another virtual currency, we consider this taxable realisation. Another example can be that an asset is lost or destroyed. A gift transfer is not considered realisation. See more information regarding realisation in the guide Skatte-ABC (only in Norwegian) (point 3 in the Skatte-ABC - “Realisasjonsbegrepet” about the term “Realisation”.)
Income from realisation
In the event of a sale or other realisation of virtual currency, you'll have a taxable gain or deductible loss. For virtual currencies such as cryptocurrency and other tokens, this means that all transactions between two or more parties will generally be one or more realisations.
The gain/loss on realisation is the difference between output value and input value for the applicable virtual currency, adjusted for any costs linked to the transaction. More information about how to calculate gain/loss.
If you operate an enterprise that trades virtual currency, you should not include the gain/loss on realisation when calculating personal income.
All income from virtual currencies is taxable.
The mining of virtual currency by transaction verification is income regardless of which protocol is being used. Examples of this is proof-of-work (mining) and proof-of-stake.
Other income may arise from, among other things, DeFi (only in Norwegian) and non-fungible tokens (NFT).
If you’ve received virtual currency in connection with forks or similar, the market value at the time of receiving it will be considered income. The market value at the time of receipt can be zero, and this will then be the input value for later calculations of gain/loss on realisation.
Income from mining that is considered business activity will be included in the calculation of personal income for self-employed persons.
Expenses and deductions
If you have expenses in connection with your income from cryptocurrency, you may have the right to claim a deduction for them. Expenses that you incur when generating income from virtual currency are considered capital expenses. Such expenses can be deducted at a rate of 22 percent. The expenses are usually deducted from the calculated gain/loss or the calculated income from mining, which reduces the taxable income or increases the deductible loss.
You can only deduct expenses related to investments in or income from virtual currency if you can provide documentation of the expenses.
You can can claim a deduction for transaction costs linked to trading and income from virtual currency.
By transaction costs, we mean costs incurred to execute each individual transaction. For cryptocurrency, this may be a set amount or a percentage of the traded amount when you trade at a crypto exchange. Another example is the “gas fee” that you must pay in order to execute a transaction on the Ethereum blockchain.
In many cases, the transaction expenses will be added to your input value when you buy and deducted from your output value when you sell or transfer virtual currency. If the transaction expenses have not been included, you must include them in your gain/loss calculation.
You can deduct expenses incurred when generating income by mining.
Expenses related to mining could, for example, be purchasing machinery, software and electricity. These expenses can be deducted when you calculate taxable income from mining.
Other expenses related to trading and managing virtual assets may also be deductible.
Examples of other expenses are analyst services, software and platform fees.
You cannot deduct expenses that are mainly related to other/private use, such as a laptop.
If the use is divided between other use and activity generating income from virtual currency, you can get a proportionate deduction. This could be a deduction for expenses related to a broadband that you pay for and that is used both privately and for trading virtual currency. If the use linked to trading virtual currency is a quarter of the total usage, you’ll be able to deduct a quarter of the expenses.
How to enter this in your tax return:
Other expenses can be entered in the field “Securities management” on the card “Management costs”.
If you have been scammed, the loss may be deducted if you can provide documentation or substantiate that the investment is finally deemed to be lost. This means that you must have tried to recover all or part of your investment.
For us to assess the deduction for loss, you must provide an explanation and documentation showing what your investment was and when the investment was made. This could be contracts or correspondence confirming or substantiating the scam and related loss.
Examples of relevant documentation could be your transactions in connection with the scam, e-mails or other correspondence with the swindler, a police report and mention of the scam in media or similar.
How to enter this in your tax return:
Enter loss due to scam in the field “Other costs linked to other income” in the card “Minimum standard deduction and other deductions for expenses linked to employment and other income”.