According to ShibDaily, Danish cryptocurrency investors are set to encounter a significant change in their financial landscape with a proposed 42% tax on the paper profits of their digital assets, even if they have not sold any Bitcoin or Ethereum. This levy, expected to be implemented in 2026, introduces complex issues regarding the valuation of volatile cryptocurrencies and its potential effects on investment strategies.
The Danish Tax Law Council has put forward a recommendation to tax both unrealized gains and losses on cryptocurrencies held by Danish investors, potentially starting in 2026. This proposal, outlined in a comprehensive 93-page document submitted recently, aims to streamline the current tax system and address concerns about the perceived unfair treatment of crypto investors. However, these recommendations are not yet final and will require further legislative action.
Danish Tax Minister Rasmus Stoklund has criticized the existing system of taxing cryptocurrencies, arguing that it has placed an undue burden on Danish investors. He highlighted numerous instances of inequitable taxation under the current capital gains approach and advocated for simpler rules governing digital assets. If approved, the new law would mandate Danish citizens to pay taxes on their Bitcoin and cryptocurrency holdings from the date of acquisition, irrespective of whether they have sold their assets.
The council’s recommendations align with Italy’s recent decision to increase taxes on crypto gains from 26% to 42%. Denmark’s move has sparked concerns within the crypto community about its potential implications on the global regulatory landscape. Some critics have described the idea of taxing unrealized capital gains as deeply unjust, noting that while many anticipated challenges during the "then they fight us" phase, this new development seems to escalate matters further.
There is speculation about whether authorities might seize bank accounts, homes, or other assets to enforce the tax, even in cases where individuals have lost access to their crypto keys. In Denmark, while it is not possible to legally avoid paying cryptocurrency taxes, several strategies can help reduce tax liability. Taxpayers over 18 can utilize a personal tax allowance of 46,700 DKK, and if this allowance is not fully used, it can be transferred to a spouse. Additionally, 30% of cryptocurrency losses can be used to offset capital gains, reducing the taxable amount. In certain situations, cryptocurrency acquired for non-speculative purposes, without the intention of making a profit, may be exempt from taxes. Individuals can petition the Danish Tax Agency to review and assess their specific investments to explore this option.
While the Danish government has embraced blockchain technology and the potential of digital assets, it has also introduced strict taxation measures to ensure that crypto transactions are properly regulated. Denmark was among the first countries to take steps toward taxing unrealized capital gains on cryptocurrencies.
