The Danish Tax Law Council has recommended introducing taxation for crypto assets, a move that could significantly impact investors by taxing unrealized gains.
Denmark to Propose Tax on Unrealized Crypto Gains in New Bill
This proposal will be followed by a bill in early 2025. The council said in a statement that its proposals “aim to eliminate the asymmetry in the taxation of gains and losses.”
Under the proposed rules, crypto investors would be taxed annually on the changing value of their holdings, regardless of whether the assets are sold or not.
“Market-to-market taxation is treated as capital income and involves continued taxation regardless of whether crypto assets are sold or not,” the council explained. Implementation Timeline and Reporting Requirements The council recommended that the new rules not come into effect before January 1, 2026. Additionally, the bill would likely include mandatory reporting from crypto service providers to disclose their clients’ crypto transactions.
The report acknowledged the difficulty of implementing effective crypto taxation due to the decentralized nature of digital assets.
Without oversight from centralized entities like governments or central banks, crypto tax regulation has remained complex.
Mads Eberhardt, a senior crypto analyst at Steno Research, warned that the proposed tax rate for unrealized crypto gains could reach 42%.
He noted that the new rules will not only apply to future purchases on X, but will also retroactively impact crypto assets dating back to Bitcoin’s genesis block in 2009.
*This is not investment advice.
