Denmark’s Tax Law Council has proposed a new bill that could introduce a tax on unrealized gains and losses on crypto assets held by Danish investors. The council’s 93-page report recommends three potential models for taxing crypto assets: capital gains tax, warehouse taxation, and inventory taxation.
The report favors inventory taxation, which would treat an investor’s entire crypto portfolio as a single “inventory” to be taxed annually, regardless of whether the assets have been sold. Under this model, crypto assets would be taxed alongside other financial assets like stocks and bonds.
Key points from the report:
- Tax on unrealized gains and losses: Danish crypto investors could face taxes on both the profits and losses of their crypto assets, even if they haven’t sold them.
- Retroactive application: The report did not clarify whether the new tax rules would apply to existing crypto asset holdings.
- Reporting requirements: Crypto asset service providers in Denmark would be required to report information about their customers’ transactions to the European Union.
- Timeline: The new bill is expected to be introduced to the Danish Parliament in early 2025, with potential implementation in 2026.
- Global trend: Denmark’s proposal aligns with broader efforts by other jurisdictions to increase tax revenue from crypto assets.
The recommendations from the Tax Law Council are still under consideration by the Danish Parliament and may be subject to changes.
October 2024, Cryptoniteuae
