Denmark Plans Groundbreaking 42% Tax on Unrealized Crypto Gains by 2026
Denmark’s Tax Law Council has recommended implementing a mark-to-market taxation system for crypto assets that would tax unrealized gains at rates up to 42%, beginning January 2026. The proposal, detailed in a comprehensive 93-page report, aims to align crypto asset taxation with traditional financial instruments while addressing longstanding challenges in the sector.
Danish Tax Minister Rasmus Stoklund highlighted the need for reform, citing instances of crypto investors facing disproportionate tax burdens under current regulations. “Throughout recent years, there have been examples of Danes who have invested in crypto-assets being heavily taxed,” Stoklund stated. “The council’s recommendations can be a way to ensure more reasonable taxation of crypto investors’ gains and losses.”
The proposal comes as cryptocurrency adoption continues to grow in Denmark, with the Danish Tax Authority estimating approximately 300,000 citizens currently own crypto assets. The new framework would introduce three key components:
- Mark-to-market taxation treating crypto gains as capital income
- Inventory taxation requiring annual portfolio valuation
- Loss write-offs allowing investors to offset losses against gains
Notably, the proposed system would tax investors on their entire crypto portfolio’s value changes, regardless of whether assets have been sold. Senior crypto analyst Mads Eberhardt of Steno Research emphasized the sweeping nature of the proposal, noting it would apply retroactively to assets acquired since Bitcoin’s genesis in 2009. “The gloves are off. This is a war on crypto,” Eberhardt remarked on social media.
The initiative also includes provisions for enhanced reporting requirements, mandating crypto service providers to share customer transaction information across European Union member states. This aligns with broader EU regulations, including MiCA and DAC8, aimed at strengthening crypto oversight and tax compliance.
While the Tax Law Council has recommended implementation no earlier than January 1, 2026, the legislative process will begin in early 2025 when the tax minister presents the formal bill to parliament. The extended timeline aims to allow for proper implementation of international agreements and give investors time to adjust to the new regulatory framework.
If enacted, Denmark would become the first nation to implement such comprehensive taxation of unrealized cryptocurrency gains, potentially setting a precedent for other jurisdictions. The move follows similar trends in crypto taxation globally, with Italy recently considering raising its capital gains tax on crypto from 26% to 42%, and other nations like South Korea and India implementing their own distinctive approaches to digital asset taxation.
