Norwegian authorities treat cryptocurrencies as investment property. Norway taxes income from mining and staking cryptocurrencies when done on a commercial scale, and taxes profits from their sale. In addition, cryptocurrencies are subject to a wealth tax. Costs associated with mining or staking, and losses incurred at sale, are tax deductible. Norwegian authorities do not appear to have issued guidelines on airdrops or forks. The tax treatment for these types of acquisitions will depend on whether the Norwegian Tax Authority considers them more analogous to mining or to gifts. The receipt of gifts is not subject to income tax.
Norway treats cryptocurrencies as investment property, i.e., as assets held for profit. All Norwegian residents are required to report taxable income (including from capital gains such as those from cryptocurrencies) in accordance with the Norwegian Income Tax Act. Norway may tax cryptocurrency at the stages of mining, retention, or sale. However, the mining of cryptocurrencies qualifies as income from a hobby and is not taxed, unless done on a commercial scale. Private and legal persons must report any held cryptocurrencies in their annual income tax filing. Cryptocurrencies are not subject to VAT.
II. Tax Treatment of Block Rewards
A. Tax Treatment of Mined and Staked Cryptocurrencies
The Norwegian Tax Authority (Skatteetaten) has issued guidance for the tax treatment of mining of cryptocurrencies. The Tax Authority typically treats mining as a hobby, the income from which is not taxed. However, when mining is carried out on a large scale it may be considered a “commercial activity” and the taxpayer to be self-employed. Hobbies are not taxed, while commercial activity is. Whether mining constitutes a commercial activity will depend on its scope and duration. According to the Tax Authority, staked cryptocurrencies are treated as mined cryptocurrencies for purposes of income taxation. Holders must report their proof of work and proof of stake protocols on their tax returns.
Persons must report proceeds from hobbies as well as from commercial activity. Income from hobby activity, such as mined virtual currencies, is reported as “other income.” Conversely, virtual currencies derived as part of a larger-scale activity must be reported as “commercial activity.” The Tax Authority has issued guidelines on how to complete the income form with respect to virtual currency income and losses. The value to be included for mined and staked currencies is the fair market value at the time of the mining. Costs incurred in mining or staking the virtual currencies, such as electricity, are deductible.
B. Tax Treatment of Tokens Received Through “Airdrops” and “Hard Forks”
The Norwegian Tax Authority has not issued specific guidance on the tax treatment of tokens received through airdrops or hard forks. In addition, no information on their tax treatment was located on the websites of cryptocurrency tax service providers. Whether cryptocurrency received through airdrops and hard forks is subject to income tax will depend on whether the Tax Authority finds these mechanisms analogous to mining and staking or to gifts. If they are deemed analogous to mining, the income would have to be reported but would only be taxed if received as part of a commercial activity. Under Norwegian law, the receipt of gifts is not subject to income tax, although gifts must be reported in income tax returns.
C. Tax Treatment of Tokens at Time of Sale
Cryptocurrencies are treated the same at the time of sale for tax purposes, regardless of the way the cryptocurrency was acquired. All sales are taxable events. Taxes are paid on the amount the sales price exceeds the cost for acquiring the asset, i.e. the capital gain. Typically, the value of the capital gain is calculated by deducting the original asset purchase price from the sales price. In the cases where the asset was obtained through mining, the taxable income will be the price at the time of sale minus the market value at the time of acquisition. For cryptocurrencies acquired through gifts, the initial value is set at the value first acquired by the giver if the giver is Norwegian, or at market value at the time of receipt if the giver is not Norwegian. If the value of the cryptocurrency at acquisition is not known, the value will be set to zero and the entire amount the cryptocurrency is sold for will be considered taxable and subject to capital gains tax.
D. Tax on Cryptocurrencies as a Form of Wealth
Norway taxes wealth above NOK 1.5 million (about US$ 175,000) at 0.7% (municipality tax) and 0.15% (state tax). Cryptoassets are considered investment assets and are taxed as such. Thus, cryptocurrency holdings must be reported annually to the Tax Authority. The value reported is the fair market value of the asset at the end of the tax year.
Prepared by Elin Hofverberg
Foreign Legal Specialist
 Bruk av bitcoins – skatte- og avgiftsmessige konsekvenser, Skatteetaten, https://perma.cc/HZS2-D5TH. For more on the regulation of cryptocurrencies generally see Elin Hofverberg, Regulatory Approaches to Cryptoassets: Norway, Law Library of Congress (Apr. 2019), https://perma.cc/F4NJ-4NBW.
 § 5-1 , § 5-20 Skatteloven.
 §§ 5-1, 5-20, 6-1 Skatteloven. See also Veiledning for kryptovaluta – hvordan fylle ut RF-1169, supra note 16.
 § 2-1 Skatteloven. See also Er jeg næringsdrivende?, supra note 4; Mining av virtuell valuta, supra note 7.
 § 5-2 Skatteloven.
 See also Mining of Digital Currency, supra note 11.
 § 5-1 Skatteloven.
 § 5-1 Skatteloven.
Last Updated: 02/05/2021