Denmark is moving toward implementing a new tax framework for cryptocurrency, which could impose taxes on unrealized gains starting in 2026.
This comes as the Danish Tax Law Council has recommended a mark-to-market taxation model for crypto assets, a system where taxes are applied on the changes in the value of the assets, even if they have not been sold.
Mark-to-Market Taxation
The Council’s recommendation, outlined in a recently published report, aims to address what it views as an imbalance in the current taxation system. According to a translated statement from the Council, the proposed taxation model “aims to eliminate the asymmetry in the taxation of gains and losses,” meaning that crypto investors in Denmark could be taxed on both gains and losses without actually realizing them through asset sales.
Mark-to-market taxation, as proposed, would treat these unrealized changes in value as capital income. Under this system, the value of cryptocurrency assets would be evaluated annually, and taxes would be applied accordingly, regardless of whether the investor sells their holdings.
Proposed Models of Taxation
The 93-page report from the Council presents three possible models for taxing cryptocurrency: capital gains tax, warehouse taxation, and inventory taxation. Of these, the inventory taxation model appears to be the preferred option. In this model, an investor's entire cryptocurrency portfolio would be considered as one “inventory,” with annual taxation applied to any changes in its value.
Senior crypto analyst Mads Eberhardt from Steno Research expressed concern over the impact of this proposal.
In a post on X (formerly Twitter), Eberhardt commented,
"This will affect not only crypto acquired from that date but also crypto obtained as far back as the genesis block of Bitcoin in January 2009. The gloves are off. This is a war on crypto."
Impact on Crypto Investors and Service Providers
Danish Tax Minister Rasmus Stoklund noted that the existing tax rules often create an unfair situation for cryptocurrency investors. According to Stoklund, the new framework seeks to simplify the process, making taxation more consistent for those holding digital assets. However, he also emphasized that the current recommendations are not final, and the proposed changes will need to go through legislative review.
In addition to changes affecting individual investors, the Council's report also proposes that cryptocurrency service providers, such as exchanges, be required to report user transactions. This data would be shared across EU member states, adding another layer of regulatory oversight for the crypto sector.
Timeline for Implementation
The Danish Parliament is expected to discuss the proposed bill in 2025, with the earliest implementation date being January 2026. If passed, the legislation would mark a significant shift in how cryptocurrency is taxed in Denmark, introducing one of the most stringent tax regimes for digital assets in the European Union.
Minister Stoklund confirmed that a formal bill incorporating the Council’s recommendations will be presented in early 2025. The bill will likely include the reporting requirements for crypto service providers, further increasing transparency and accountability in the sector.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
