In a new binding answer from the Danish Tax Council, it was decided whether an heir should pay tax on the sale of 10 bitcoins inherited from a deceased spouse. The surviving spouse therefore wanted clarity on whether tax should be paid on the sale of these.

The issue of taxation of cryptocurrency, including bitcoins, is generally determined by assessing whether the assets were acquired in speculation. If it is deemed that there is no speculation, a gain on sale will be tax-free. Conversely, if the cryptocurrency is deemed to have been acquired for speculative purposes, the gain is taxable. This is regulated in the State Tax Act, which sets out the rules for how assets, including cryptocurrency, are taxed. You can read more about this in our ultimate guide to bitcoin and tax.

The question of speculative intent is usually assessed at the time of acquisition and is therefore particularly relevant in this case, where it was not the surviving spouse who had acquired the relevant cryptocurrency holdings.

In the specific case, the Tax Council attached decisive importance to the fact that the surviving spouse had actively chosen to receive part of his inheritance in bitcoins rather than cash. In the opinion of the Tax Council, this disposition was considered to be a factor indicating speculation.

The Tax Council referred to previous rulings from the Supreme Court, which confirmed that cryptocurrencies are generally considered speculative assets. The National Tax Tribunal has also previously ruled that even if cryptocurrency is given as a gift, there may be speculation, as cryptocurrency is basically considered a speculative asset.

In conclusion, the Tax Council emphasized that the speculative intent therefore does not necessarily depend on whether the heir has acquired bitcoins himself. The properties of cryptocurrencies in themselves make it highly likely that speculation is involved, and thus they are generally taxable upon sale. This also harmonizes with the Supreme Court's practice, according to which cryptocurrency is generally acquired for the purpose of resale.

On this basis, the Tax Council concluded that the inherited 10 bitcoins should be considered to have been acquired in speculation. This means that any gain from a future sale of the 10 bitcoins must be taxed as personal income. 

The Tax Council also assessed the question of the heir's time of acquisition of the bitcoin stock. The question is relevant because it constitutes the acquisition price, which is relevant in connection with the calculation of the inheritance tax and any later realized profit or loss. In this connection, the Tax Council assessed that the heir had acquired the bitcoins in question at the time of the closing of the estate, which is considered the cut-off date.

The Tax Council's decision can be read here.

Our comments

The Tax Council's decision follows the Supreme Court's practice, according to which it must be assessed in each case whether the taxpayer has acquired his holding of cryptocurrency in speculation and where it is also assumed that cryptocurrency is acquired for the purpose of resale. If you inherit cryptocurrency, it is therefore neither the case that you "automatically" enter into the heir's possible speculative intent, nor that you have necessarily acquired your cryptocurrency in speculation simply because you have inherited them.

If you have inherited cryptocurrency, it is therefore important that you get a concrete assessment of your tax position.

As Denmark's only specialist office within cryptocurrency, Samar Law has extensive experience in advising on matters concerning the tax treatment of cryptocurrency. If you want advice on taxation of cryptocurrency, we encourage you to contact lawyer Payam Samarghandi at payam@samarlaw.dk or mobile 60793777 for a non-binding conversation.