In a comprehensive 93-page report, the Council recommended that all crypto assets be taxed under uniform rules. Three models were suggested: capital gains tax, warehouse taxation, and inventory taxation. The latter, inventory taxation, appeared to be the Council’s preferred method.

Inventory Taxation Approach

The Danish Tax Law Council recommended three potential taxation models, each with its own advantages. Source: Skatteministeriet

The inventory model treats an investor’s entire crypto portfolio as one “inventory,” taxed annually regardless of whether the assets have been sold. This could mean Danish crypto holders would pay taxes on both unrealized gains and losses, aligning crypto taxation with other financial assets like stocks.

Simplifying Crypto Taxation

Danish Tax Minister Rasmus Stoklund acknowledged flaws in the current system, which has unfairly taxed some investors. He expressed a desire for simpler, clearer tax rules to ensure fairness in crypto taxation, especially as the country grapples with taxing such volatile assets.

Potential EU-Wide Crypto Reporting

In addition to new tax models, the proposed bill would mandate that crypto service providers, such as exchanges, report customer transactions. This data would be shared with EU nations to ensure compliance.

The proposal is set to be introduced to the Danish Parliament in 2025, with implementation not expected until at least 2026. However, the recommendations are still under review and may not become law.