Denmark Set to Introduce Tax on Unrealized Crypto Gains in New Legislation

• The Tax Law Council of Denmark has proposed a bill in a 93-page report to impose taxes on unrealized gains and losses on crypto assets.
• The Council recommends that the new rules take effect from January 1, 2026, allowing time for the implementation of international agreements and giving investors the chance to adjust to the changes.

The Tax Law Council of Denmark has put forward a proposal recommending tabling a bill that could see a shift to subject unrealized gains and losses of crypto assets held by Danish crypto investors to taxes as early as January 2026. Based on a survey in Spring 2024, approximately 300,000 Danes own crypto-assets. Taxation has been a long-standing issue in Denmark mainly because a government or a central Bank does not centrally regulate cryptocurrencies.

Taxing Unrealized Gains and Losses of Crypto Assets

In the report, the Council recommended bringing all non-backed crypto-assets such as Bitcoin (BTC) into the existing financial taxation framework. It mentioned three models to tax crypto assets in Denmark: capital gains tax, warehouse taxation, and inventory taxation.

Tax Minister Rasmus Stoklund highlighted that there have been Danes that are being heavily tasked while investing in cryptocurrency under a “Capital gains approach”.

According to the Tax Law Council, under the inventory taxation model, the assets would be taxed just like other financial instruments, such as stocks and bonds. The proposed mark-to-market taxation would involve taxing the annual changes in the value of crypto assets, regardless of whether they are sold. The consequence of this for owners of crypto assets in Denmark is that they are put in a position where unrealized gains and losses are subject to taxation.

According to Mads Eberhardt, a senior crypto analyst for Steno Research, he wrote on X, “the tax on unrealized capital gains would be 42%.” He added that the tax model will affect not only crypto acquired from that date but also assets obtained as far back as the genesis block of Bitcoin in January 2009.

The Tax Council added that the bill would be aimed at obliging crypto asset service providers, such as crypto exchanges and crypto payment companies, to “report information about their customers’ transactions” in a manner that can be accessible to all countries in the European Union. The proposals in the report must be considered and voted on by the Danish Parliament before they are passed to be laws.

Recommendations by Denmark’s Tax Council come amidst a greater drive from other jurisdictions to tighten the screws on taxes for both crypto and traditional financial assets. This move may set a precedent for other countries considering similar regulations, reflecting a broader trend of integrating cryptocurrencies into formal economic frameworks.