NFT Tax: Should you pay tax? (Total Guide)

Declaring and paying NFT tax is as important as any other taxation. Despite this, many people do not know how to do it or how much to actually tax. You can't really blame anyone for that since this topic is still relatively new in Sweden, but if you trade, create or sell NFTs, you are legally required to pay tax on them. And considering the huge sums that an NFT can be sold for, you can see why it is important.

In this comprehensive post, we look at the taxation of NFTs and what applies to you, so you can feel more confident about this topic.

First of all, what is an NFT?

It is almost a cryptocurrencyexcept that it is not used as a digital currency, but is instead a non-fungible token. In Swedish you can call it a non-fungible token, which in this case means that the visual code cannot be changed and stays the same. In this way, you can own a digital NFT and know that you are the only person in the world who owns that particular NFT.

An example of an NFT could be a picture of a monkey from a computer-generated collection. There may be 100 computer-generated monkeys and if you own one, you know that you are the only one who has one.

Do you have to pay taxes on NFT?

The first and most important thing to understand is to account for tax on NFTs. It works just like when to declare cryptocurrency taxas long as you only trade with them. This is done in the K4 form where you fill in the cost amount and the sales price. As with cryptocurrencies, 30 per cent of the profit is taxed, while 70 per cent of the loss can be deducted from the profit.

In the case of creators who create NFTs, the tax on these must also be reported, but this is done slightly differently. It is reported as income tax, where the declaration process differs depending on whether you run it as a business or a hobby.

Example purchase and sale of NFTs for crypto sales

Let's say you only trade NFTs and cryptocurrencies. You have made 10 transactions with NFTs and 10 sales of crypto. Of these 20 transactions 10 of them have made a profit. Since all you have done here is trade these assets, this means that 30 % is taxed on the profit and 70 % of the loss can be deducted.

To get the total tax for your 20 transactions, you can first deduct 70 % on the 10 transactions that were losses, and then 30 % on the transactions that were profits. Then add this up to get your total tax!

The difference between hobby and business

When it comes to the taxation of NFTs as assets, it is important to know the difference between what you are doing so that you pay the right tax. For example, if you only trade them, the tax applies according to one tax table, while the sale and creation of NFTs against payment is taxed according to another. 

It is still unclear what is classed as a hobby and what is classed as a business in this context, but it is important that you are categorised in one of these so that you do not get it wrong. The reason for this is that NFT is still very new in Sweden and it has not yet been possible to classify everything correctly. 

Because it is still not entirely clear, we recommend that you contact the Tax Agency if you are unsure of what to choose when declaring NFT tax.

If you do not declare your NFT

So, what happens if you do not declare crypto or NFT at all? According to the Swedish Tax Agency, you first receive a reminder and then the case is handed over to the Swedish Enforcement Authority where they will chase you for collection. You must then also pay a fee called "basic fee" of SEK 600.

In addition to this, if you have, for example, unpaid Bitcoin tax coinbase or mining tax and do not intend to declare them, it would theoretically be considered criminal. According to the Tax Offences Act so can a person can be convicted if the offence is unintentional, which in the worst case can result in imprisonment.