Denmark’s New Crypto Bill Proposes Tax on Unrealized Gains Dating Back to Bitcoin’s Birth

Key Takeaways

• Denmark proposes a 42% capital gains tax on unrealized crypto profits dating back to Bitcoin’s birth.
• The tax regime would introduce inventory taxation, loss write-offs, and capital gains taxation.
• The reform aims to simplify the tax system, eliminate unfair treatment of crypto investors, and reduce tax evasion

Denmark is looking to bring the country’s cryptocurrency investors in line with traditional asset holders.

The new tax bill , which could take effect as early as January 2026, proposes imposing a 42% capital gains tax on unrealized profits.

Denmark’s New Crypto Tax Plan

If approved, the new law would require Danish citizens to pay taxes on their Bitcoin (BTC) or crypto holdings from the day of acquisition, regardless of whether they’ve sold their assets.

This means that investors would be liable for taxes on their entire portfolio, including any unrealized gains as if they had sold their assets on a specific date each year.

Denmark’s Tax Law Council, which released a 93-page proposal on Oct. 23, aims to simplify the tax system and eliminate what it sees as unfair treatment of cryptocurrency investors.

The council’s recommendations align with those of Italy, which recently increased taxes on crypto gains from 26% to 42%.

Denmark’s tax minister, Rasmus Stoklund, said the new regulations will streamline the tax system. 

“Throughout recent years, there have been examples of Danes who have invested in crypto-assets being heavily taxed. The council’s recommendations can be a way to ensure more reasonable taxation of crypto investors’ gains and losses.” 

A legislative proposal will soon follow up the Tax Law Council’s recommendations.

Three-Tiered Tax System

The proposed tax regime would introduce three key schemes for crypto assets:

• Inventory Taxation: Investors would be required to pay taxes on their entire portfolio by a specific date each year, even if they don’t sell any assets.
• Loss Write-Offs: Investors could write off losses on gains from other cryptocurrency assets, similar to traditional investments.
• Capital Gains Taxation: The regime would impose a 42% capital gains tax on unrealized profits, bringing Denmark’s crypto taxation in line with its approach to traditional assets.

The proposal also requires crypto service providers to report user transactions, with the government planning to share investor data internationally by 2027. This aims to increase transparency and reduce tax evasion in the crypto market.

Impact on Crypto Investors

The proposed tax reform would have significant implications for Denmark’s crypto investors.

While the 42% capital gains tax may be steep, the ability to write off losses and simplify the tax system could provide relief for many investors.

Additionally, Denmark’s proposed tax reform could set a precedent for other countries seeking to regulate and tax the crypto industry.