tl;dr
Denmark is set to implement a groundbreaking tax reform, introducing a 42% tax on unrealized capital gains for cryptocurrencies, including Bitcoin, starting January 1, 2026. This move aims to align the taxation of digital assets with traditional investments and address the complexities of taxing cry...
Denmark is set to implement a groundbreaking tax reform, introducing a 42% tax on unrealized capital gains for cryptocurrencies, including Bitcoin, starting January 1, 2026. This move aims to align the taxation of digital assets with traditional investments and address the complexities of taxing cryptocurrencies. The government also plans to exchange data on Danish crypto investors internationally and require crypto service providers to report customer transactions to regulate the approximately 300,000 Danes who own crypto-assets and prevent potential tax evasion.
Additionally, investors will be allowed to offset losses from one cryptocurrency against gains in another, as well as gains on financial contracts. These changes follow Italy's decision to raise its capital gains tax on cryptocurrencies from 26% to 42% as part of broader efforts to increase government revenue.
According to the press statement, Denmark will impose a 42% tax on unrealized capital gains for all crypto assets. This crypto tax will apply to assets like Bitcoin, which are not backed by any physical assets or fiat currencies. Consequently, the law if passed will bring these digital assets under the same taxation rules as traditional investments.
The government intends to align the crypto taxation with the existing rules for other investment types, such as stocks and bonds. Moreover, the new tax policy will affect crypto purchased as far back as the genesis block of Bitcoin in 2009. Hence, anyone holding cryptocurrencies will be subject to this 42% tax rate on unrealized gains, regardless of whether they sell their holdings.
The introduction of this crypto tax will address the complexities of taxing digital assets. The decentralized nature of cryptocurrencies has made taxation difficult for both authorities and crypto holders. To solve this, Denmark plans to introduce additional regulatory measures. The Danish government announced that starting in 2027, they will exchange data on Danish crypto investors internationally. They also plan to introduce a bill in early 2025 requiring crypto service providers to report customer transactions. This will help Denmark regulate approximately 300,000 Danes who own crypto-assets and curb potential tax evasion.
In addition, the government will allow investors offset losses from one crypto against gains in another, as well as gains on financial contracts. This approach will correct the current taxation system’s asymmetry, which heavily taxes investors on gains. These developments coincide with Italy’s efforts to tighten its control over digital assets. Recently, Italy announced plans to increase its capital gains tax on cryptocurrencies, raising it from 26% to 42%. This change is part of Italy’s broader effort to boost government revenue by taxing profits from cryptocurrency investments.