Tax authorities in Denmark will soon have access to user data from cryptocurrency exchanges in the country, in a move designed to aid tax investigations into those trading in cryptocurrencies.
The landmark move was announced by the Skattestyrelsen this week, and will see the authority glean information from exchanges about their users, including names and addresses, trades and other transactional information.
Three as-yet unnamed exchanges will be the first to be asked to divulge user information, which will cover the period from 2016 to 2018.
In an application for the powers to the country’s Tax Council, the Skattestyrelsen said it wanted to “obtain information on unexecuted taxpayers’ and companies’ virtual currency transactions.”
The powers come in the wake of disclosures from Finnish regulators over activity on an unnamed Finnish exchange, which saw a number of traders based in Denmark speculating on cryptocurrencies.
The Danish agency’s personal tax director, Karin Bergen, said that this was proving a significant problem for tax authorities, and said the agency was committed to investigate whether any tax liability existed.
“Without going too far, I think you can say that this is a big market that we need to look into,” Bergen said in a statement.
According to a statement published by the agency in December, there are some 2,700 Danish citizens reported to have been trading on a Finnish exchange from 2015-2017, with volumes in excess of US$15.35 million under consideration.
Bergen continued, suggesting that the data could indicate a more widespread problem when other exchanges were taken into account. The official said, “This is probably just the tip of the iceberg…Although it is a relatively small…exchange, the information is a very valuable source that clearly shows trends and patterns in the field.”
The developments come at a time of increasing interest in the affairs of cryptocurrency traders and speculators from tax authorities worldwide.
With the new powers, which will compel exchanges to hand over information about their customers and the transactions made through their platforms, there is no doubt tax authorities further afield will be keeping a close eye on the Danish approach.
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