Denmark’s Tax Law Council has recommended a bill that could introduce taxation on unrealized gains and losses on crypto assets for Danish investors, potentially starting in 2026.
The proposal, outlined in a 93-page report, suggests a uniform tax approach for all crypto assets. The council explored three possible models for taxing crypto assets: capital gains tax, warehouse taxation, and inventory taxation.
In the report, Danish Tax Minister Rasmus Stoklund mentioned concerns about the current capital gains tax system, which he believes unfairly taxes crypto investors. Stoklund expressed the need for simpler and clearer tax rules to address these issues.
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Denmark Proposes Inventory Taxation For Crypto
One model that gained attention in the report is “inventory taxation,” which would tax an investor’s entire crypto portfolio as a single entity at a set date each year, regardless of whether the assets were sold or not.
According to the Tax Law Council, “inventory taxation occurs as capital income and implies continuous taxation, regardless of whether crypto assets have been sold.”
Under this model, Danish crypto investors could face taxes on both unrealized gains and losses, similar to how stocks and bonds are taxed. However, the report did not clarify how this tax would apply to existing holdings or how far back the new rules would reach.
Denmark is considering a 42% tax on unrealized gains for #Bitcoin, with the proposal potentially taking effect in January 2026. pic.twitter.com/Iv00zqNCtO
— TFTC (@TFTC21) October 23, 2024
Additionally, the proposed bill would require crypto service providers, such as exchanges and payment platforms, to report customer transaction data to ensure transparency across the European Union.
The bill is not expected to be introduced to the Danish Parliament until early 2025, and if passed, it would not take effect until at least 1 January 2026. Despite the recommendations, the final decision will rest with the Danish Parliament.
Minister Stoklund emphasized the importance of creating more appropriate rules for taxing crypto assets, noting that discussions in the Folketing, Denmark’s national legislature, will be key to shaping the final law.
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Governments Seek To Impose Stricter Tax Regulations On Crypto
Denmark’s move follows a global trend of governments seeking to impose stricter tax regulations on both crypto and traditional financial assets. For example, in the US, Democrat presidential candidate Kamala Harris has proposed a 25% tax on unsold assets.
Likewise, Italy’s Vice Economy Minister, Maurizio Leo, has announced plans to increase the capital gains tax on digital assets to 42%. “We foresee an increase in the tax on Bitcoin capital gains from 26% to 42%,” Leo said.
Furthermore, UK Chancellor Rachel Reeves is considering raising capital gains taxes, including those on digital assets, from 20% to 39%. The move is a far cry from the Government’s 2022 report announcing that stablecoins were to be recognized as a valid form of payment.
In that report, Her Majesty’s Treasury called the move ‘part of wider plans to make Britain a global hub for cryptoasset technology and investment.’
