Denmark will impose a 42% tax on unrealized gains from cryptocurrencies, increasing the burden on in
Denmark will launch an unprecedented tax reform starting from January 1, 2026, imposing taxes on unrealized capital gains from cryptocurrencies. This bold initiative aims to incorporate cryptocurrencies such as Bitcoin into the existing financial tax framework, making them similar to other investment assets. The Tax Law Committee recommends that the tax apply to future cryptocurrency acquisitions and retroactively apply to cryptocurrencies acquired since the birth of Bitcoin in January 2009.
Denmark will impose a 42% tax on unrealized gains from cryptocurrencies
According to a press statement, Denmark will impose a 42% unrealized capital gains tax on all cryptocurrency assets. This tax will cover cryptocurrencies such as Bitcoin that are not supported by any physical assets or legal tender. Therefore, if this law is passed, these digital assets will follow the same tax rules as traditional investments such as stocks and bonds.
The government's goal is to align the taxation of cryptocurrencies with existing tax regulations for other investment types, such as stocks and bonds.
In addition, this new policy will also apply to cryptocurrencies purchased since the creation of Bitcoin's memory blocks in 2009. That is to say, anyone holding cryptocurrency will pay a 42% tax on their unrealized gains, regardless of whether they sell their cryptocurrency assets. Danish Tax Minister Rasmus Stoklund expressed support for this reform and said:
In the past few years, cryptocurrency investors in Denmark have often faced heavy tax pressures. Therefore, I am pleased that the tax committee has submitted some detailed and up-to-date recommendations today. These recommendations will help ensure that the gains and losses of cryptocurrency investors can be taxed more fairly
Regulatory challenges and their impact on investors
The introduction of this cryptocurrency tax will help address the complexity of taxing digital assets. Due to the decentralized nature of cryptocurrencies, taxation is difficult for both authorities and holders of encrypted assets. To address this issue, Denmark plans to introduce more regulatory measures.
The Danish government has announced that starting from 2027, they will exchange data on Danish cryptocurrency investors internationally. They also plan to propose a bill in early 2025 requiring cryptocurrency service providers to report customers' transaction records. This will help Denmark regulate approximately 300000 Danish citizens who own cryptocurrency assets and prevent tax evasion.
In addition, Denmark's reform of taxation on unrealized gains, although appearing to increase the scope of taxation, may actually alleviate the tax pressure on investors in some cases. For example, the revised tax system will allow investors to offset the losses of one cryptocurrency against the profits of another cryptocurrency, or offset the profits of financial contracts. This measure will correct the deviation of the current tax system, which imposes excessive taxes on investors' earnings.
These developments are in line with Italy's efforts to strengthen regulation of digital assets. According to a previous report by Zombiet, Italy announced an increase in its cryptocurrency capital gains tax from 26% to 42%.
