Danish tax agency refused using Koinly's tax report

Tax Questions
#1

Is said in the title, the Danish tax agency refused Koinly’s tax report for 2021 and asked me to send all the relevant documentation for control. We were sending files and messages back and forth during this summer and they came up with their own report and suggestions on my taxes. It doesn’t look good. If I accept their report and offer, I’ll have to pay approximately $6000 extra in taxes. And I didn’t really earn this money. Actually, I lost most of my money in 2021 due to lack of experience. And now this… It looks like they didn’t use all my trades in their calculation. The trade history calculated by Koinly (received from API) includes more information than the information that I could download from exchanges as CSV files.

If there are Danes who were in this situation and/or can share their experience and advice on how to proceed from here, I would appreciate any suggestion.

Thanks

#2

@Dmitrij_Motley

Hey buddy, I hope you are well!

I have had a chat with the team internally and would advise you that the Danish Tax Agency will not outright accept the Koinly Tax Report on its own.

What you would need to do, is fill out the Danish Tax forms using the data on the Koinly report.

Feel free to email me directly at [email protected], we can take a look at your account to spot for any import errors which may be inflating your gains figure.

#3

@Ali_Koinly

Hey Ali

I knew that I couldn’t use the Koinly report at the Danish Tax Agency by itself. I used the data on the Koinly report to fill out the forms exactly as you recommended doing. We do it online. The trouble was that not all fields that I had to fill was accessible. I could add the income but the fields where I had to add my losses as well as capital gains weren’t there and I had to contact the Tax Agency in order to open them. They did, but due to the fact that I did it the very last day and then it was a weekend, I added the remaining data after the date due. That’s why they decided to control everything manually.

Long story short, they made their own calculation based on data from CSV files I provided them with. They said that if they needed more information, they would contact me. I expected that they would check if the data from the Koinly report was correct, but they didn’t. They just made their own calculations. They had, of course, those infamous “Missing purchase history” issues but didn’t ask me to send them additional information on the funds movement. They just added fictional “0” cost purchases and added all the balances to my income.

I don’t think that I have many import errors. I used tons of time to get rid of all those errors and my balance looks pretty good I believe.

They explain their refusal of using Koinly report like this (In Danish: Eftersom Koinly ikke behandler stablecoins og negative beholdninger efter gældende retspraksis er Koinly-rapporten tilsidesat.) which is translated to English as “Since Koinly does not process stablecoins and negative holdings according to current case law, the Koinly report is disregarded.”

I still need their explanation on what they mean by “processing stablecoins according to current case law”.

I downloaded another Koinly report - the full transaction history that shows all the movements that my money made during last year. Now I need compare the Tax Agency’s FIFO calculation with the Koinly’s and show them transactions that they missed in their report. That means I have to show the Tax Agency that they made their job badly.

Wish me luck.

1 Like
#4

@Dmitrij_Motley

Thanks for explaining that, it seems that the tax agency is being extra difficult in this case.

Of course, like them, Koinly will also assume 0 cost-basis for missing purchase history too but it’s strange they did not ask you for the information when you had it readily available.

It would be good if you could share any response you receive from them regarding the case law they refer to. :+1:

1 Like
#5

@Ali_Koinly
I will keep you updated.

I’ve been looking through the tax agency’s FIFO report during the weekend and found out that it was made totally unprofessionally. It looks like they just don’t know how crypto and blockchain work.

For instance, I found that they treated some transfers between exchanges and wallets as exchanges. Imagine that you transfer BNB from FTX to Metamask and it appears on the report as an exchange where there is a buy or a sell figure only, no counterpart.

I have a question. How does Koinly treat stablecoins? When I browse through my transfers at Koinly, I see that every time I buy a coin for USDT, Koinly calculates it as if USDT was sold (hence there is a small gain or loss on the transaction despite I didn’t sell the coin yet). I believe my tax agency wants exactly this. But as they write that “Since Koinly does not process stablecoins according to current case law”, this means they don’t know how Koinly does it.

My question is: is there any explanation of how Koinly treats stablecoins on Koinly’s website that I could get a link to share it with the tax agency?

#6

Hey @Dmitrij_Motley ,

As far as stablecoin treatment goes, it’s the same as if were any other cryptocurrency token. It is subject to CGT or Income Tax depending on the type of trade you are involved in.

We actually have a blog/article on stablecoins, would this be sufficient?

#7

Hi Dmitrij

How many total transactions is in your trade history for 2021?

#8

How unfortunate a story from the Danish tax authorities. I myself live in Denmark and have only just started with my first baby steps in the crypto world, and when I found ‘Koinly’ I was really happy. But thank you for saving me this money for a membership here at ‘Koinly’. If Denmark does not recognize Koinly, there is probably no reason to use it either. :frowning:

#9

Sorry for the late response. The trouble with the Danish tax agency is that they are not prepared to deal with this new technology. Also, the big trouble in my case was that they failed to read csv files properly. They used data from the Binance trades csv file totally wrong. For instance in case of a BUY trade, say BTCUSDT (I bought BTC for which I paid with USDT), they placed both BTC and USDT in the same (buy) column instead of putting BTC in the buy column and USDT in the sale column and wise versa in the case of sale trade. Can you imagine to how much imbalance it has made? There were approximately 100 wrong trades from Binance alone in their report, which I had to edit and send them back. There were many other type of mistakes that I had to fix in their report. Now I’m waiting for their reply on my edits and suggestions. The only thing I like about this situation is that they are very friendly and polite.

I will continue using Koinly because I don’t see many other options to prepare and calculate a tax report anyway.

#10

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