Denmark’s Tax Law Council has recommended implementing a mark-to-market taxation policy for cryptocurrency assets. The proposal, announced in a recent report, will serve as the basis for a future legislative initiative.
The Denmark Tax Law Council recommendation aims to address the imbalance in how gains and losses from cryptocurrencies are taxed. Under the proposed policy, investors would be taxed on both realized and unrealized gains or losses. This type of taxation involves evaluating the annual change in the value of crypto assets, regardless of whether they have been sold.
โMark-to-market taxation will be treated as capital income and involve ongoing taxation,โ the Council stated. This approach addresses the unique nature of cryptocurrencies, which lack centralized oversight from entities like governments or central banks.
The Council suggested that these changes should not be enforced before January 1, 2026. In early 2025, the Minister of Taxation is expected to introduce a bill that includes the Council’s recommendations. The legislation will likely require crypto service providers to disclose information about their clients’ transactions involving cryptocurrrency assets.
Mads Eberhardt, a senior crypto analyst at Steno Research, noted on X (formerly Twitter) that the tax rate for unrealized capital gains could be as high as 42%. He highlighted that the new tax rules would apply not only to future crypto holdings but also to assets acquired as far back as Bitcoinโs inception in January 2009.
Eberhardt added, โThe gloves are off. This is a war on crypto,โ reflecting concerns that the new measures could significantly impact the Danish crypto market.