Benjamin Franklin, a well-known American statesman, said: “Nothing is certain in this world but death and taxes.” It’s an observation that may now apply to cryptocurrencies, as Denmark plans to impose a ban New tax policy Targets unrealized capital gains of cryptocurrencies like Bitcoin.
Denmark: Tax reform for crypto assets
The Danish government is about to take a bold step to initiate a groundbreaking tax reform covering digital assets such as Bitcoin.
It is considered as An unprecedented step Since the cryptocurrency space has been subject to government regulation in many countries and the ongoing debate about implementing more government regulations and taxes on it.
According to the Danish government, tax authorities will start collecting a 42% tax on unrealized crypto gains by 2026, which can be seen as an advance warning of things to come in the cryptocurrency space.
Under the new tax policy, the Danish authorities wanted to include Bitcoin and other cryptocurrencies in their existing financial taxes. The unprecedented tax reform will treat cryptocurrencies as investment assets.
Cryptocurrency holders who own digital assets that are not tied to a central bank or backed by physical assets will have to pay a 42% tax on their unrealized gains.
BTCUSD trading at $67,122 on the 24-hour chart: TradingView.com
Imposing a tax on crypto assets in the future
Danish Tax Law Board He said in a press release that all cryptocurrencies should be taxed in the future according to the country’s tax policies.
Tax authorities explained that the government already imposes a tax on some asset-based crypto assets, so it is fair to also impose tax rules on Bitcoin and other “unbacked crypto assets.” It is a rule that, according to the Tax Board, is consistent with tax policy applied to other types of investments.
BREAKING: Denmark has become the first country in the world to impose a tax on unrealized capital gains on cryptocurrencies, starting January 1, 2026. The tax on unrealized capital gains is 42%.
This will not only affect cryptocurrencies acquired since that date, but also cryptocurrencies acquired since their inception…
– Mads Eberhardt (@MadsEberhardt) October 23, 2024
The Tax Board of Denmark has admitted that taxing cryptocurrencies is a challenge for the government and crypto asset owners due to… Cryptocurrencies It is not subject to central regulation by the central bank or any other government institution.
Danish Tax Minister Rasmus Stocklund said that the tax recommendation made by the council has been updated so that cryptocurrency traders will be taxed more appropriately.
“Over recent years, there have been examples of Danes who invested in crypto assets being severely taxed,” Stocklund noted, adding that “the recommendations could be a way to ensure more reasonable taxation of the gains and losses of cryptocurrency investors.”
Image: Vidhi Centre for Legal Policy
Taxation of cryptocurrencies around the world
Formulating a tax framework to cover crypto assets is a global trend. Other countries are also exploring how to tax digital assets.
In Italy, the government recently announced that it is looking to implement a tax of between 26% and 42% on cryptocurrencies, a reform that Italian authorities see as a way to improve capital gains tax. It is part of the Italian government’s proposal for a comprehensive tax policy on investment gains from cryptocurrency.
Germany, on the other hand, has set a 10-year holding period for tax-free capital gains on digital assets, a more lenient move to encourage long-term investment among cryptocurrency users.
Around the world, many countries are recognizing the need for a regulated tax framework for cryptocurrencies.
Featured image by Fedor Selivanov/Alamy Stock, chart from TradingView