Bitcoin and cryptocurrency trading in Sweden
Sweden has a positive attitude towards crypto and blockchain technology that runs from the top down, with an openness to a cashless future and numerous crypto trading and spending facilities.
Law and crypto trading in SwedenLegal - existing crypto legislation
Bitcoin and other cryptocurrencies are recognized and accepted by the Swedish government as legitimate, but the exact classification as to their status, i.e. a currency or a good, is subject to debate. Sweden is pretty laid back about crypto and its regulatory body, the Swedish Financial Supervisory Authority recognizes cryptocurrencies as a legitimate form of payment even though it is not recognized as a currency as such. In fact, the Swedish Enforcement Agency even auctioned off some bitcoin it had seized from a resident as compensation for a tax debt!Legal - forthcoming crypto legislation
New laws and classifications relating to crypto are continually being debated along with the trialing of a digital Krona, so it’s worth checking on the latest news to see how any changes will impact your activities.
Taxing cryptocurrencies in Sweden
Tax is a subject never far away from bitcoin and other digital currencies. Put simply, any crypto that you purchase as an investment is treated as capital property and the gains and losses you realise on them are either income taxable or deductible. Just for the record the current average income tax rate is at 32% and keeping false records could earn you a hefty Swedish fine.
The position on VAT on crypto was not so clear cut for a long time until the Swedish Administrative Supreme Court ruled that bitcoin and similar cryptocurrencies are not subject to VAT – a decision backed by a judgement from the European Union. For trading, capital gains tax is applied to cryptocurrency at a flat rate of 30% and losses are deductible for up to 70%.
Tax when moving residency
If you are a long-term resident of Sweden you are probably deemed a permanent resident for tax purposes. If you are not a permanent resident, and your holdings are outside of Sweden you’ll fall under the required tax laws of your adopted country.
Tax on mining
The Swedish Tax Authority published a guideline on how it would view and tax mined bitcoins and other virtual currencies and concluded that mined coins are generally tax exempt.
Crypto financial services in Sweden
Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.
Cryptocurrencies are openly discussed and widely understood right from the top down. The government is trialing the possibility of digital Krona and that involves the Swedish Central Bank.
Decentralized finance grew rapidly in 2020. The Bank for International Settlements estimated back in 2018 that Sweden is the world’s most cashless society – used as a percentage of gross domestic product. The government is looking to leverage some of DeFi’s advantages, but nothing is clear yet.
Using crypto in Sweden
Spending all your cryptocurrency in Sweden is a lot easier than in many other countries and Sweden is increasingly open to its use. The country is some way ahead, including bars and retail outlets and the usual global brands such as Starbucks and Microsoft. Sweden is also considering a move to a digital currency and its central bank is trialing a pilot project to introduce an electronic Krona based on blockchain technology.
If you’re feeling generous, gifting in Sweden is tax free and that includes giving away crypto. However, similar to lost or stolen crypto, you can’t deduct gifted crypto from your profits. Also, if you receive crypto as a gift you’ll only pay tax on it when you come to sell it.
Crypto regulation in Sweden
Both bitcoin and ether are traded as exchange-traded notes (ETNs) on the Swedish Stockholm Nasdaq Exchange allowing for speculation in the cryptocurrencies in the same way as speculations in gold or oil. As usual, home-based exchanges and services may offer more customer support and recourse in the event of a problem, but overseas-based exchanges may offer a wider choice of services and more competitive rates.
As with many government bodies, the Swedish tax authorities can request information from crypto exchanges and get it, so your dealings can be made transparent. Exchanges need to provide the Financial Authority with information and keep a record of its transactions and need to register in accordance with the law.