Key Points
- The Danish Tax Council recommends implementing mark-to-market taxation for all crypto assets, affecting approximately 300,000 Danish crypto holders. This represents a significant shift from the current system and aims to provide more equitable tax treatment.
- New regulations will allow investors to offset losses against gains from other crypto assets and financial contracts, with implementation targeted for January 2026 alongside new EU-wide information sharing requirements.
Major Tax Reform Signals Shift in Danish Crypto Regulation
The Danish Tax Council has unveiled a comprehensive report recommending a standardized mark-to-market taxation framework for cryptocurrency assets. This landmark proposal, aimed at modernizing Denmark’s crypto tax regime, comes as an estimated 300,000 Danes now hold various forms of digital assets, according to a spring 2024 survey by the Danish Tax Agency.
Unified Taxation Approach to Level Playing Field
Under the proposed framework, all cryptocurrency assets, including non-backed assets like Bitcoin, will be subject to mark-to-market taxation – a system already applied to certain asset-based cryptocurrencies. Danish Tax Minister Rasmus Stoklund emphasized that these recommendations aim to ensure fairer taxation of crypto investors’ gains and losses, addressing previous concerns about harsh tax treatment.
Understanding the New Mark-to-Market Framework
Under the proposed framework, all cryptocurrency assets, including non-backed assets like Bitcoin, will be subject to mark-to-market taxation – a system already applied to certain asset-based cryptocurrencies. This means Danish crypto investors will need to calculate their portfolio’s value at the end of each tax year and pay taxes on any value increases, even if they haven’t sold their holdings. Conversely, if their portfolio value decreases, they can claim these losses. Danish Tax Minister Rasmus Stoklund emphasized that these recommendations aim to ensure fairer taxation of crypto investors’ gains and losses, addressing previous concerns about harsh tax treatment.
International Compliance and Information Sharing
The proposal aligns with broader international efforts to regulate the crypto sector. Starting in 2027, Denmark will participate in international information exchange agreements, enabling better oversight of Danish investors’ crypto transactions. Additionally, the Tax Minister plans to introduce legislation in early 2025 requiring crypto service providers to report their customers’ transactions, facilitating information sharing among EU member states.
Implementation Timeline and Future Outlook
The Tax Council recommends implementing these changes no earlier than January 1, 2026, allowing time for both the integration of international agreements and for investors to adjust to the new regulatory framework. The proposal is expected to proceed to legislative discussions, with Minister Stoklund planning to present a formal bill in early 2025 that incorporates the Council’s recommendations.
