How the tax calculation works
The CryptoSkat calculation engine is built and based on remaining in full accordance with the way the Danish tax authorities calculate profit and loss on trading and other transactions with Bitcoin, other cryptocurrency and digital assets.
When you upload your transaction data to CryptoSkat, CryptoSkat receives all the data necessary for the system to calculate profit and loss on your transactions in accordance with the practice of the tax authorities. Regardless of whether you have 10 or 10,000 transactions.
In some cases, however, CryptoSkat does not receive all the necessary data via upload.
This can happen because the data we receive via your API connections can be incomplete. There can be variation in which data the various exchanges send via API connections because there are no standards in crypto for data transfers/transaction data export via API.
In case of missing data from a transfer, e.g. USD value of a trade fee paid with 0.01 ETH, CryptoSkat collects the missing data from CryptoCompare. CryptoCompare is a recognized and market-leading provider of historical data for digital assets across all exchanges and can provide historical data with accuracy down to 1-minute intervals.
This ensures that you always have accurate data for your trades – either retrieved from your exchange via API or retrieved from CryptoCompare. It all happens automatically and continuously every week when your exchange accounts are connected to CryptoSkat via API.
Once your transaction data is retrieved, CryptoSkat converts profit and loss on all trades to both a value in US dollars and Danish kroner. This happens via integration with The Danish Central Bank so you can be sure that profit and loss are always calculated in accordance with The Danish Central Bank’s official exchange rate.
Once your data is uploaded to CryptoSkat the system calculates loss and profit for each individual trade. On the basis of this you can generate an annual tax report for any given year. When you receive the annual report in the system, in addition to a total statement of profit and loss for the year, you also get a total statement of the year’s movements, starting and ending balance calculated per currency, exchange and wallet and a complete list with all necessary transaction data for all your transactions over the year.
The annual report can be downloaded as a PDF.