Bitcoin Tax Criminal Case. Penalty Reduced to DKK 50,000

Disagreement about the taxation of Bitcoin

The central question in the case was how the client had understood the rules on the taxation of their Bitcoins.

The client had been of the view that taxation should only take place upon disposal, and this understanding had been confirmed by an adviser.

During the tax criminal case, we therefore argued that the failure to provide a correct tax return was not an expression of a deliberate attempt to evade tax.

The decisive factor was thus not only whether the tax treatment had been correct, but also what the client knew and had reason to believe at the time when the information was to be provided to the Tax Agency.

Gross negligence, not intent

After our submissions and the review of the circumstances of the case, the Criminal Case Unit agreed that the client had not acted with intent.

The conduct was instead assessed as gross negligence.

This had a significant impact on the criminal assessment and on the size of the fine.

The result was that the fine was set at DKK 50,000 in a case where the alleged tax evasion amounted to around DKK 1.2 million, and where the client originally faced far more serious criminal consequences.

Partner's fine reduced by DKK 2 million

We simultaneously represented the client's partner in a related tax criminal case.

Here, too, a significant reduction was achieved, with the fine reduced by DKK 2 million.

The two cases show how great an impact a concrete review of both the tax circumstances, the advice and the client's actual knowledge can have in cryptocurrency cases.

Tax cases on cryptocurrency can develop into criminal cases

The taxation of Bitcoin and other cryptocurrency can give rise to complicated questions concerning, among other things, purchase, sale, exchanges, documentation and the calculation of gains and losses.

If the Tax Agency considers that incorrect returns have been filed over several years, an ordinary tax case can subsequently develop into a liability case or tax criminal case.

Here, an independent assessment must be made of whether the taxpayer has acted with intent or gross negligence.

It is therefore important to consider the tax and criminal aspects of the case together from the outset.

Charged in a tax case on Bitcoin or cryptocurrency?

We assist in tax cases and tax criminal cases concerning Bitcoin, cryptocurrency, tax evasion, fines and liability cases before the Danish Tax Agency's Criminal Case Unit.

If you have received an enquiry from the Tax Agency about your cryptocurrency transactions, a notice of a liability case, or have already been charged, you are welcome to contact us for a confidential and non-binding assessment of your case.