The decision to implement new tax regulations on cryptocurrency in Denmark, which includes the taxation of unrealized gains and losses, has been the subject of some misreporting.
AltcoinBuzz, a cryptocurrency news outlet, inaccurately stated that Denmark has “made history” by becoming the first country in the world to tax unrealized capital gains on cryptocurrency. In the interim, CoinGape reported that Denmark will implement a 42% tax on unrealized capital gains for all crypto assets.
In reality, Denmark’s tax law council has proposed three distinct taxation models in a paper that it has been developing since 2021. There has been no official adoption of any of these tax proposals.
It is highly probable that these regulations would not be implemented until 2026, even if they were agreed upon at the time of publication.
Rasmus Stoklund, the Tax Minister, disclosed on Wednesday that the Tax Law Council had submitted current recommendations to “guarantee more reasonable taxation of crypto investors’ gains and losses.”
In order to eliminate the substantial taxes that certain cryptocurrency proprietors are required to pay, the 93-page report suggests that all cryptocurrency assets should be taxed uniformly.
The Tax Law Council appears to endorse an inventory taxation model, despite the fact that the report suggests three distinct taxation models. In this instance, all assets, such as equities and bonds, would be consolidated and appraised. The total change in value is subject to taxation.
According to the Skatteministeriet’s press release, the Tax Law Council’s recommendations suggest that the asymmetry in the taxation of gains and losses is eliminated.
“Moreover, the recommendations enable the offset of losses on financial contracts against gains on crypto assets, and vice versa. Inventory taxation is a form of capital income that results in continuous taxation, irrespective of whether crypto-assets have been sold.”
In early 2025, the Danish parliament will be presented with a bill. Prior to voting on the bill, the parliament must conduct a thorough evaluation of the report.
The crypto tax report is released in close proximity to Italy’s planned 50% increase in capital gains tax on cryptocurrency, which is expected to increase from 26% to 42%.
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