Denmark’s ‘historic’ crypto tax change is far from a done deal

Denmark is considering new tax rules on cryptocurrency, including taxing unrealized gains and losses, which has led to some misreporting that the decision has already been made.

Crypto news outlet AltcoinBuzz falsely reported that Denmark “has made history by becoming the first country in the world to tax unrealized capital gains on cryptocurrency.” Meanwhile, CoinGape wrote that Denmark “will impose a 42% tax on unrealized capital gains for all crypto assets.”

In reality, Denmark’s tax law council has proposed three separate models of taxation in a paper it has been working on since 2021. None of these tax proposals have been adopted in any official capacity.

Even if one were agreed upon at press time, these rules most likely wouldn’t take effect until 2026.

Here’s what actually happened

Tax Minister Rasmus Stoklund announced on Wednesday that the Tax Law Council had submitted up-to-date recommendations to “ensure more reasonable taxation of crypto investors’ gains and losses.”

The 93-page report recommends that all cryptocurrency assets should be taxed the same, in order to remove the heavy taxations that some crypto holders must pay.

Though three separate taxation models are proposed in the report, the Tax Law Council appears to recommend an inventory taxation model. Here, all assets — including stocks and bonds — would be lumped together and valued. The total change in value is taxed.

Read more: Michael Saylor says he’s paying bitcoin taxes, unlike ‘crypto-anarchists’

“The Tax Law Council’s recommendations imply that the asymmetry in the taxation of gains and losses disappears,” the Skatteministeriet wrote in its press release. “That is, investors can deduct losses in gains on other crypto assets.

“In addition, the recommendations make it possible to set off gains on crypto assets against losses on financial contracts – and vice versa. The so-called inventory taxation occurs as capital income and in return implies that the taxation occurs continuously, regardless of whether crypto-assets have been sold,” (translated from Danish).

The Danish parliament will be presented a bill somewhere in early 2025, and it must then carefully evaluate the report before any decision is made.

The crypto tax report comes hot on the heels of a scheduled 50% hike in Italy, where capital gains tax on cryptocurrency is set to rocket from 26% to 42%.

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