Denmark Plans to Tax Unrealized Crypto Gains Starting in 2026 with Major Reforms in Place

Denmark Plans to Tax Unrealized Crypto Gains Starting in 2026 with Major Reforms in Place

Denmark is preparing to implement a groundbreaking tax reform by introducing a 42% tax on unrealized capital gains from cryptocurrencies like Bitcoin, starting January 1, 2026. The Danish Ministry of Taxation made the announcement on Wednesday, marking an effort to bring the taxation of crypto assets in line with traditional financial assets. This proposal is aimed at creating a simpler and more balanced taxation system for crypto investors.

Tax Minister Rasmus Stoklund explained that many Danish crypto holders have faced unfair taxation under the standard capital gains tax system, and the new regulations would help address these issues.

Tax Council Proposes Comprehensive Crypto Taxation Framework

Denmark's Tax Council has recommended a system where crypto investors can offset gains and losses, not only from one crypto asset to another but also between crypto assets and financial contracts. This method, called inventory taxation, would ensure that cryptocurrencies are taxed as capital income, regardless of whether they are sold. Investors would be taxed on both unrealized gains and losses, although how these new rules will apply to existing crypto holdings remains unclear.

Crypto Reporting Laws Expected in Early 2025

In early 2025, the Danish Minister of Taxation is expected to propose a bill requiring crypto service providers to report transaction details to ensure compliance with EU regulations. This bill will include the Tax Council's recommendations on crypto taxation, aiming to create clearer and more appropriate rules for the growing crypto market.

Denmark’s move follows Italy, which recently raised its capital gains tax on Bitcoin and other cryptocurrencies from 26% to 42%, signaling a wider European trend towards stricter crypto taxation.