Denmark Crypto Scam & Loss Deduction Guide (SKAT Rules)

Scam, Hack, and Bankruptcy Losses

Under SKAT's published Q&A, if cryptocurrency bought for speculative purposes is lost through fraud, bankruptcy, theft, or hacking, you are entitled to a deduction for your loss if the following conditions are met: you can document the loss (transaction records, police reports, platform bankruptcy filings, blockchain explorer records), your claim falls under the Danish Capital Gains Act (Kursgevinstloven) — which applies to cryptocurrency held for speculation — and the loss is considered final, which requires an individual assessment by SKAT. A loss is final when there is no reasonable prospect of recovering the assets. For exchange bankruptcies (e.g., FTX, Celsius, BlockFi), the loss is generally not considered final until the bankruptcy proceedings have concluded or it becomes clear that creditors will receive little or no recovery. For hacks and scams, the loss may be considered final when the perpetrator cannot be identified or the stolen funds cannot be traced.

Example — FTX bankruptcy: Anders held 50,000 DKK worth of crypto on the FTX exchange when it filed for bankruptcy in November 2022. In 2024, the bankruptcy administrator announces that creditors will recover approximately 25% of their claims. Anders cannot deduct the full 50,000 DKK — only the portion that is genuinely lost (37,500 DKK, representing 75% of his claim). He must wait until the bankruptcy proceedings provide certainty about the final recovery rate before claiming the deduction. The deduction is reported in box 58 ("Øvrige lønmodtagerudgifter — tab") on his tax assessment notice. The effective tax value of the deduction is approximately 26% (the municipal tax rate), meaning Anders would save approximately 9,750 DKK in tax on a 37,500 DKK loss. In contrast, if Anders had withdrawn his crypto from FTX before the bankruptcy, he would not face this issue — the loss only arises if the crypto remained on the platform and was lost in the insolvency.

Documentation requirements for scam/hack losses: Provide detailed records including: transaction IDs and blockchain explorer links showing the stolen/lost funds, police report or acknowledgment from relevant authorities (Danish Police or international agency), correspondence with the platform or protocol about the security incident, proof of ownership (wallet addresses, KYC records from the exchange), records of any recovery efforts (insurance claims, litigation, bankruptcy claims), and a statement explaining why the loss is considered final. SKAT may request additional documentation. If you cannot provide sufficient evidence, the deduction may be denied. For losses over 50,000 DKK, consider requesting a binding ruling to confirm the deduction is available before filing.

Lost Passcodes and Private Keys

A common but often misunderstood scenario is losing access to cryptocurrency because you have lost your private keys, seed phrase, or passcode. Under Danish tax law, simply losing your passcode does not entitle you to a deduction. SKAT's position is that when you lose the passcode to a virtual wallet, the contents of the wallet are not considered lost — you retain ownership of the cryptocurrency. The reasoning is that the cryptocurrency still exists on the blockchain and you still hold the legal title to it. You have merely lost the ability to access it. The loss is not "final" because there is a theoretical possibility that you could regain access (e.g., through a wallet recovery service, a found backup, or technological advances).

Example — lost seed phrase: Mette holds 2 BTC in a hardware wallet. She loses the seed phrase and cannot access the wallet. The 2 BTC have a market value of 700,000 DKK. Under SKAT's rules, Mette cannot deduct this loss. She still owns the 2 BTC — the bitcoin exist on the blockchain at the address she controls — and the loss of access does not constitute a realisation event. If Mette ever recovers her seed phrase and sells the BTC, she will owe tax on the full gain. The only exception may be if Mette can prove that the cryptocurrency was definitively destroyed (e.g., the hardware wallet was physically destroyed in a fire with no backup). Even then, proving a "final loss" to SKAT's satisfaction is extremely difficult. The conservative approach is to assume that lost private keys do not create a deductible loss. Maintain multiple secure backups of your seed phrases in geographically separate locations to avoid this situation entirely.

Undocumented Deposits — DKK 0 Basis

An undocumented deposit refers to cryptocurrency that appears in your wallet or account for which you cannot provide documentation of how you acquired it — including the time, method, and price of acquisition. Under Danish tax rules, if you receive a deposit that you cannot document, you must set the acquisition price at DKK 0 when calculating the gain upon its sale. This is because the lack of documentation prevents you from claiming a tax deduction for the acquisition price. If you cannot provide proof of purchase, the deposit is treated as a purchase at DKK 0 at the time of deposit, and the full sale proceeds are taxable as a speculative gain in box 20.

Example — undocumented deposit: Jonas finds 10,000 USDT in a wallet that he does not remember creating. He has no records of purchasing the USDT, no transaction history from an exchange, and no documentation showing how the funds arrived. If he sells the 10,000 USDT at a USD/DKK rate of 6.90, the proceeds are 69,000 DKK. Because he cannot document the acquisition, the cost basis is DKK 0, and the entire 69,000 DKK is taxable as speculative personal income in box 20. Jonas owes tax at his marginal rate (up to ~53%) on the full amount — approximately 36,570 DKK. If Jonas could document that he purchased the USDT for 60,000 DKK, his gain would be only 9,000 DKK with a tax bill of approximately 4,770 DKK. The difference is dramatic — underscoring the importance of maintaining purchase records.

What qualifies as documentation? Acceptable documentation includes: exchange transaction history (CSV or PDF download), bank statements showing fiat deposits to the exchange, purchase confirmations from peer-to-peer platforms, blockchain transaction records linked to a purchase (e.g., a payment to an exchange address), and any correspondence with the counterparty. Documentation must include the date, amount, price, and counterparty. For non-custodial acquisitions (e.g., mining, airdrops), documentation should include the block reward record, the airdrop announcement, and the market value at receipt. If you have partial documentation (e.g., you know you bought 1 BTC but cannot document the price), SKAT may accept a reasonable estimate, but the burden of proof is on you. In the absence of any documentation, the default is DKK 0.

Internal Transfers Between Own Wallets

An important exception to the undocumented deposit rule is internal transfers between your own wallets or accounts. If you transfer cryptocurrency from one wallet to another — and you can demonstrate that both wallets belong to you — the transfer is not considered a taxable disposal. It is a private movement of assets, and the original cost basis carries over. Similarly, if you receive a deposit in a wallet and can show that it came from another wallet you own (e.g., moving funds from an exchange to a hardware wallet), the deposit is documented through the transaction record linking the two addresses. Internal transfers should generally not be included in FIFO calculations — they are neutral events.

How to document internal transfers: Maintain a wallet inventory that maps all your addresses to your identity. For each transfer between wallets, record: the sending address, the receiving address, the transaction ID, the date and time, the cryptocurrency and amount, and a note explaining the purpose (e.g., "transfer from Binance exchange to Ledger hardware wallet for safekeeping"). If you use a crypto tax software, it will typically detect internal transfers automatically when both addresses are tagged as belonging to you. If SKAT audits your tax return and sees a deposit that is not explained, they may ask you to prove it was an internal transfer. A well-maintained wallet inventory and transaction log will satisfy this requirement. The key distinction for SKAT is that internal transfers do not involve a change in beneficial ownership — you retain full control and economic exposure before and after the transfer.

Reporting Losses and Binding Rulings

To report a deductible crypto loss (from scam, hack, or bankruptcy), enter the loss in box 58 ("Øvrige lønmodtagerudgifter — tab") on your tax assessment notice (årsopgørelse). The loss is deductible at the municipal tax rate only (approximately 26%), not at the progressive personal income rate. This means the tax value of a loss is significantly lower than the tax cost of an equivalent gain — a 10,000 DKK loss saves you approximately 2,600 DKK in tax, while a 10,000 DKK gain costs you up to 5,300 DKK. This asymmetric treatment is a feature of the Danish crypto tax system and makes loss harvesting less valuable than in symmetric tax regimes.

Binding ruling recommended: For significant losses (over 50,000 DKK), SKAT strongly recommends requesting a binding ruling (bindende svar) to confirm that your loss qualifies under the rules. The binding ruling process requires you to submit a detailed description of the loss event, your documentation, and your analysis of why the loss meets the conditions. SKAT will issue a binding answer confirming whether the loss is deductible. If the answer is positive, you can claim the deduction with confidence. If negative, you avoid filing a claim that could trigger penalties. The fee is approximately 300–1,000 DKK, and processing takes 3–6 months. Given the high stakes — a potentially large deduction versus a potential penalty of up to 200% of underpaid tax — the cost of a binding ruling is trivial in comparison. To apply, visit skat.dk and search for "Bindende forhåndsbesked." For questions on crypto loss deductions, call SKAT at (+45) 72 22 28 94.

FAQs

Can I deduct a loss if an exchange goes bankrupt but I might get some money back?

Not yet. You can only deduct the portion of the loss that is final. If the bankruptcy proceeding is ongoing and the recovery rate is uncertain, you must wait until the process concludes. Once the administrator announces a final distribution percentage, you can deduct the difference between your claim and your recovery. If you later receive an unexpected additional distribution, you report it as income in the year received.

What if I was scammed by a person I know — can I deduct that?

Yes, provided you can document the scam (messages, transaction records, police report) and the loss is final (the person cannot or will not repay you). If you have a legal judgment against the scammer but they have no assets to satisfy it, the loss may be considered final. Report the loss in box 58. SKAT may scrutinise scam deductions between related parties more closely, so ensure your documentation is complete.

Does SKAT automatically accept my documented purchase records for cost basis?

SKAT accepts documentation that is credible and complete. However, they may audit your records, particularly if the amounts are large or the documentation appears manufactured. Using a reputable crypto tax software that provides a detailed audit trail can help. If you acquired crypto through methods that are hard to document (e.g., peer-to-peer, mining, airdrops, gifts), maintain the best records possible and be prepared to explain the absence of conventional purchase receipts.

What happens if I find my lost seed phrase years later?

If you recover access to a wallet after having treated the crypto as lost (and not claimed a deduction), no adjustment is needed. If you claimed a deduction for a loss that turns out not to be final because you later recovered access, you may need to amend the prior year's tax return to reverse the deduction. Failure to do so could constitute tax fraud. This is one reason SKAT is strict about the "final loss" requirement — they do not want taxpayers claiming deductions for losses that may later reverse.

Is there a minimum threshold for reporting crypto scam losses?

There is no formal minimum threshold, but in practice SKAT may not pursue very small amounts (under 1,000 DKK). However, you should still accurately report all losses regardless of size. If you are ever audited, a pattern of small unreported items could undermine your credibility. If in doubt, include the loss. The conservative approach is to report all deductible losses, no matter how small, using the appropriate boxes on your tax assessment notice.