Cryptocurrency is a field that more and more companies have to deal with, and it is crucial to know how to properly account for such assets. Here we give you an overview of the most important points you should be aware of, so that you can avoid mistakes and ensure that everything is reported correctly.
Purchase of cryptocurrency: What must be documented?
When you buy cryptocurrency, such as Bitcoin or Ethereum, you do not need to report this immediately in your tax return. But it is important to ensure that you have a good overview of all relevant details from the time of purchase! This involves storing documentation that shows when you bought the currency, the costs associated with the transaction, and the market value at the time of purchase.
The value of the cryptocurrency should be calculated based on the exchange rate on the date of purchase, and this includes any costs you incurred along the way, such as transaction fees. If you do not have access to the exchange rate information from the place of purchase, you can use alternative sources such as Coinmarketcap to find historical courses. Remember that the values must be converted to Norwegian kroner using Norges Bank's exchange rates.
For more information on how to determine the value of cryptocurrency, you can check The Norwegian Tax Agency's guidance here.
Cryptocurrency Bookkeeping: How Do You Go About It?
Once the cryptocurrency is purchased, this should be recorded in your accounts in a way that reflects whether it is a short-term or long-term investment. If the plan is to keep the investment over time (i.e. longer than one year), it should be entered on a account for long-term assets (i.e. a account which begins at 13). If, on the other hand, you plan to sell it within a short time, it is entered on a account which reflects short-term investments (starting at 18).
To keep track of different cryptocurrencies, you may want to have separate accounts for each type of currency. This makes it easier to follow the values and any changes.
Managing sales: What do you do when you sell?
When selling cryptocurrency, it is important to calculate and book the gain or loss correctly. To calculate this, you compare the original purchase price, including transaction costs, with the sales value, both converted to Norwegian kroner.
The sale itself is recorded in the accounts by entering the amount received into an income account, while the original cost is deducted as an expense. If you have been engaged in mining or other production of cryptocurrency, this can be entered as inventory (account which starts at 14) until you sell the currency.
Would you like to know more about how to report cryptocurrency gains or losses in your tax return? Click here to read the Tax Agency's guide.
A few final things to keep in mind
Cryptocurrency is exempt from VAT for transactions, regardless of whether you buy or sell with a profit or loss. That means you don't have to worry about calculating VAT when trading with cryptocurrency. If you use cryptocurrency as a means of payment, remember that this must also be reported and entered in the accounts.
For additional information on specific cryptocurrency tax rules, please visit The Tax Agency's website here.
Summary
Handling cryptocurrency in the accounts requires accurate documentation and correct bookkeeping. With the correct overview of purchases, sales and values, you can ensure that everything is reported correctly to the Swedish Tax Agency. Make sure you have all the necessary details in place, and use resources such as the Swedish Tax Agency to find specific guidance where needed.
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