Denmark to Implement 42% Crypto Tax on Unrealized Gains

Denmark’s Ministry of Taxation has proposed a bill that would tax unrealized gains on cryptocurrency holdings starting January 1, 2026. This move seeks to bring crypto assets like Bitcoin on par with the taxation of traditional financial assets.

The bill, if passed, will make Denmark the first nation to tax unrealized gains on cryptocurrencies.

Denmark To Tax Unrealized Crypto Gains

According to the press release, Denmark will impose a 42% tax on unrealized capital gains for all crypto assets. The proposal applies to future acquisitions and cryptocurrencies acquired since Bitcoin’s inception in January 2009.

Hence, anyone holding cryptocurrencies will be subject to this 42% tax rate on unrealized gains, regardless of whether they sell their holdings. By taxing unrealized gains, Denmark aims to prevent people from avoiding taxes just by holding onto their crypto.

Furthermore, the tax law council highlighted that this move aims to address the imbalance between taxing gains and losses. 

According to tax minister Rasmus Stoklund, many Danish crypto investors have been subject to unfair taxation under the standard capital gains tax. Therefore, the proposal would create a simpler approach for taxing crypto.

“Throughout recent years, there have been examples of Danes who have invested in crypto-assets being heavily taxed. That is why I am pleased that the Tax Council has today submitted some elaborate and up-to-date recommendations. The council’s recommendations can be a way to ensure more reasonable taxation of crypto investors’ gains and losses”, he stated. 

Denmark’s tax proposal reflects a growing trend among governments to tighten tax regulations around cryptocurrencies as their adoption expands.  Earlier this month, the Italian government considered raising the capital gains tax on Bitcoin holdings from 26% to 42% starting in 2025.

Crypto Community Reacts 

The announcement has sparked debate within the crypto community. Proponents believe that this move could create more transparency and prevent evasion as crypto assets can be easily moved and hidden across borders. 

However, some believe the move could discourage investment and innovation within Denmark’s digital economy, potentially driving crypto-related businesses and activities to more favorable jurisdictions. Others argue that taxing unrealized gains is unfair and places an undue burden on investors, given the volatility of crypto assets.