Sweden Tightens Crypto Reporting Rules: No More Flying Under the Radar

Over the past decade, international cooperation in the field of taxation has increased significantly. Whereas previously only bilateral tax treaties existed, there are now EU directives and multilateral agreements on the exchange of information between banks, countries, and platforms. However, these frameworks have generally not included crypto assets.

To extend oversight to crypto assets and crypto-related income, the EU directive DAC 8 has been adopted. The directive introduces far-reaching measures regarding the reporting of crypto holdings, which may pose significant risks for Swedish taxpayers who have not been transparent with the Swedish Tax Agency (Skatteverket) about their crypto-related income and assets.

Background on information exchange

For some time, there has been a relatively well-functioning system of automatic information exchange between countries. Frameworks such as CRS mean that countries share information about individuals’ income and assets. For example, a person who is tax resident in Sweden but holds assets in a Swiss bank would, under CRS, have the Swiss authorities automatically transmit information on those assets and related income to the Swedish Tax Agency.

There are also frameworks that allow for manual requests for tax-related income and asset information between countries. The Swedish Tax Agency can therefore request information on a particular individual’s potential income from the tax authority in another country, where it suspects that the person may hold assets and/or receive income.

Until now, these frameworks have mainly targeted more traditional assets, such as shares, funds, securities, and so-called fiat currency. Swedish holders of crypto assets have thus largely been able to “fly under the radar".

As crypto assets have become increasingly common, both for institutional investors and private individuals, the need has been identified to strengthen oversight of crypto-related assets and income for tax purposes.

What is DAC 8?

DAC 8 is the name of a legislative package developed primarily by the OECD, which has been enacted as an EU directive. As an EU Member State, Sweden must implement the directive into its domestic legislation.

The Swedish government has therefore presented a legislative proposal introducing two entirely new laws: the Act on the Automatic Exchange of Information on Crypto Assets and the Act on the Collection of Certain Tax-Related Information on Crypto Assets. The proposal also introduces amendments to, among others, the Swedish Tax Procedure Act (SFL) concerning reporting obligations.

The new laws are directed at crypto exchanges. Once the laws enter into force, such exchanges will be required to register with the Swedish Tax Agency.

The number of Swedish-based exchanges is likely quite small, so the laws may not have a major direct effect on Swedish companies. However, the impact will be significant for Swedish individuals who hold accounts and crypto assets with exchanges in other jurisdictions, since the Swedish Tax Agency will gain access to far more information than before. In fact, even crypto exchanges established outside of the EU will be subject to DAC 8, if they have users in the EU zone.

What consequences does DAC 8 have for Swedish tax residents who own crypto?

Crypto exchanges subject to the new rules will be required to collect information about the countries in which their users are tax resident. For Swedish tax residents, this means that detailed information about all transactions – including exchanges, wallet-to-wallet transfers, conversions to fiat currency, and similar – may be reported directly to the Swedish Tax Agency.

For Swedish tax resident individuals who own crypto assets, DAC 8 may therefore have far-reaching consequences, particularly for those who have not previously reported their crypto transactions correctly. Under the new rules, exchanges must collect information on users – both in their capacity as private individuals and as controlling persons of companies – and forward this information to the Swedish Tax Agency.

This represents an entirely new level of transparency for Swedish tax authorities. Transactions that previously often went unnoticed – such as exchanges between different cryptocurrencies, transfers between wallets, or conversions to fiat currency – will now be systematically reported and reviewed.

The legislative proposal may therefore entail significant risks for those who have not disclosed their crypto-related income. For such individuals, the urgent question is whether they should consider submitting a so-called voluntary disclosure (frivillig rättelse) to the Swedish Tax Agency, in order to reduce retroactive risks. As a general rule, the Swedish Tax Agency can reassess tax returns up to six years back and impose additional income tax, along with tax surcharges – in practice penalty fees.

In addition to financial risks, there is also a real possibility that cases could lead to criminal investigations and prosecutions for tax fraud, if the Swedish Tax Agency concludes that there has been deliberate concealment of taxable income. Likely a spike of these cases will occur after the legislation is properly implemented.

In summary, DAC 8 introduces a new reality for Swedish holders of crypto assets: what previously could “fly under the radar” will now be exposed to scrutiny by the authorities. Those who do not review their past tax filings risk facing both major financial consequences and legal proceedings.

What does DAC 8 mean for crypto platforms?

For crypto exchanges based in Sweden, the new laws will mean mandatory registration with the Swedish Tax Agency and annual reporting of user transactions and holdings.

This will impose significant administrative obligations on Swedish exchanges, with the Swedish Tax Agency empowered to apply sanctions in the form of fees and other penalties for non-compliance.

Concluding recommendations

For Swedish individuals holding crypto assets, it is important to already prepare for the increased transparency that DAC 8 will bring. If you have not previously reported your crypto transactions correctly, it may be wise to consider a voluntary disclosure to minimize the risk of retroactive tax assessments, surcharges, and, in the worst case, criminal investigations.

At the same time, it should be noted that there are also lawful tax planning options available for Swedes who wish to dispose of crypto assets at low or no taxation. We can provide advice on such alternatives and analyze whether a voluntary disclosure may be appropriate in your specific situation.