Denmark’s Tax Law Council has proposed a bill that could impose taxes on unrealized gains and losses for cryptocurrency assets held by Danish investors, potentially starting in 2026.
In its comprehensive 93-page report on crypto asset taxation, the council suggested that all crypto assets should be governed by the same taxation framework. They explored three potential models: capital gains tax, warehouse taxation, and inventory taxation.
The report seemed to favour an approach known as “inventory taxation,” which would treat an investor’s entire crypto portfolio as a single entity. It would impose taxation at a specified date each year, regardless of whether the assets had been sold.
This method is similar to how other financial assets, like stocks and bonds, are taxed, potentially leading to taxes on both unrealized gains and losses for Danish crypto holders. The report does not clarify how these new rules would apply to existing crypto holdings.
The proposed regulations are meant to address the challenges faced by Danish investors under the conventional capital gains tax model, which many see as unsuitable for crypto assets. Danish Tax Minister Rasmus Stoklund emphasized that these new rules aim to offer clearer and more equitable taxation methods.
“I believe there is a need for clearer and more suitable regulations in this area. That’s why I look forward to introducing a bill and discussing it with the parties in the Folketing,”
Stoklund stated.
Additionally, the proposal includes provisions requiring crypto asset service providers, such as exchanges, to report customer transaction data in a way that is accessible internationally.
The Danish Parliament will review the bill in early 2025, with potential implementation by January 1, 2026, if approved.
Denmark’s Tax Council’s recommendations come as various European jurisdictions, including Italy, seek to tighten tax regulations on cryptocurrencies. Italy’s government plans to significantly raise the capital gains tax on Bitcoin investments from 26% to 42% as part of its 2025 budget. Deputy Economy Minister Maurizio Leo announced that this increase aims to broaden Italy’s tax base and underscores the rising significance of digital assets in the economy, impacting both institutional and individual investors.
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