Denmark considers tax on unrealised crypto gains by 2026

Denmark’s Tax Law Council has proposed a bill that could tax unrealised gains and losses on crypto assets held by Danish investors.

The council’s 93-page report outlines potential tax rules that might come into effect in 2026, pending approval from the Danish Parliament.

The proposal presents three possible models for crypto taxation: capital gains tax, warehouse taxation, and inventory taxation.

The council leaned towards the “inventory taxation” model, treating an investor’s entire portfolio as a single inventory subject to annual taxation, regardless of asset sales.

“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,” the council stated.

Danish Tax Minister Rasmus Stoklund acknowledged that the current capital gains tax approach has resulted in unfair treatment of crypto investors.

He emphasised the need for simpler rules, aiming to bring clarity to the taxation process.

Additionally, the report proposed requiring crypto service providers, including exchanges and payment firms, to report transaction information, accessible within the European Union.

If implemented, the bill would align crypto asset taxation with other financial instruments like stocks and bonds.

However, the report did not clarify whether these new rules would apply retroactively to existing holdings, causing some uncertainty for investors.

The council’s recommendations are not final and require review and approval by the Danish Parliament.

An official introduction is not expected before early 2025.

“There is a need for clearer and more appropriate rules in the area. I look forward to discussing the bill with the parties in the Folketing,” Stoklund remarked.

Denmark’s proposal aligns with a global trend of tightening tax regulations on both crypto and traditional financial assets.

Countries like the U.S. and Italy are similarly considering taxes on unrealised gains, reflecting increasing scrutiny over crypto investments.