24th October 2042 – (Copenhagen) Denmark’s Tax Law Council has proposed the introduction of a bill that could potentially impose taxes on unrealised gains and losses on crypto assets held by Danish crypto investors, starting as early as 2026.
In a comprehensive 93-page report on crypto asset taxation, the Council suggested that all crypto assets should be subject to taxation under a unified set of regulations. The report deliberated on three possible models for taxing crypto assets in Denmark: capital gains tax, warehouse taxation, and inventory taxation.
Danish Tax Minister Rasmus Stoklund highlighted instances where Danish crypto investors faced unfair taxation under the conventional “capital gains tax” regime. He advocated for new tax laws that would streamline the taxation of crypto assets.
It’s important to note that these recommendations do not guarantee immediate implementation. Despite this, some individuals on social media misinterpreted the report, assuming that the proposed tax changes were definite.
The report seemed inclined towards endorsing an approach known as “inventory taxation,” where an investor’s entire portfolio is treated as a single “inventory” to be taxed annually by a specified date, regardless of asset sales.
According to the Tax Law Council, under the inventory taxation model, crypto assets would be taxed alongside traditional financial instruments like stocks and bonds. This means that Danish crypto asset owners could face taxation on both unrealized gains and losses.
The report did not specify the retrospective application of the new tax rules to existing crypto holdings. Furthermore, the bill is expected to mandate crypto asset service providers to furnish information about their clients’ transactions, accessible to all EU nations.
The proposed bill is not slated for introduction to the Danish Parliament until early 2025. The Tax Law Council recommended that any new regulations should come into effect no earlier than January 1, 2026.
The recommendations outlined in the report are subject to evaluation and approval by the Danish Parliament before becoming law. Tax Minister Stoklund emphasised the need for clearer and more appropriate rules in this area, expressing eagerness to present the bill for discussion in the Folketing.
Denmark’s Tax Council’s suggestions align with a broader trend across jurisdictions to tighten tax regulations for both crypto and traditional financial assets. For instance, Democratic presidential candidate Kamala Harris endorsed a policy proposing a 25% tax on unsold assets in the US. Similarly, the Italian government considered raising the capital gains tax on Bitcoin holdings from 26% to 42% starting in 2025.