Denmark is exploring new tax regulations regarding cryptocurrency, which may include taxation on unrealized gains and losses. This consideration has sparked some inaccurate reports suggesting that a decision has already been finalized.
Crypto news platform AltcoinBuzz incorrectly stated that Denmark “has made history by being the first country globally to levy taxes on unrealized capital gains from cryptocurrency.” Similarly, CoinGape reported that Denmark “will enforce a 42% tax on unrealized capital gains for all crypto assets.”
In truth, Denmark’s tax advisory council has put forth three distinct taxation models in a report they have been developing since 2021. None of these proposals have been officially endorsed.
Even if an agreement is reached before the deadline for this report, these tax regulations likely wouldn’t be implemented until 2026.
Here’s what actually happened
Tax Minister Rasmus Stoklund reported on Wednesday that the Tax Law Council has submitted updated suggestions to “facilitate a more equitable taxation of gains and losses for crypto investors.”
The 93-page report advocates for a uniform tax treatment of all cryptocurrency assets, aiming to alleviate the burdensome tax situations some crypto holders face.
While three different tax models are suggested within the report, the Tax Law Council seems to recommend an inventory taxation model. In this approach, all assets — including stocks and bonds — would be aggregated and valued, with the overall change in value being taxed.
Read more: Michael Saylor states he’s paying bitcoin taxes, unlike ‘crypto-anarchists’
“The Tax Law Council’s recommendations indicate that the disparity in taxation of gains and losses will be eliminated,” stated the Skatteministeriet in its press release. “This means investors can offset losses against gains from other crypto assets.”
“Moreover, the recommendations allow for gains on crypto assets to be offset by losses on financial contracts – and the other way around. The so-called inventory taxation is treated as capital income and thereby implies that taxation occurs continuously, regardless of whether crypto-assets have been sold,” (translated from Danish).
The Danish parliament is expected to receive a bill early in 2025, after which it will need to thoroughly assess the report before any decisions are made.
This crypto tax analysis follows closely behind a planned 50% increase in Italy, where the capital gains tax on cryptocurrency is rising from 26% to 42%.
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