Trading platforms such as Mt. Gox and FTX went bankrupt in 2014 and 2022 respectively. Common to these platforms was that their users had stored their cryptocurrencies on the platforms and that these cryptocurrencies were part of the bankruptcy estates' bankruptcy estate.

Specifically, users on Mt. Gox users, they lost access to their bitcoins, and there have been long and uncertain prospects for their repayment. These days, however, users are experiencing that they are being paid an amount of their bitcoins from the bankruptcy estate. The question is then whether - and if so, how - the bitcoins paid out are relevant for the users' tax returns.

The Danish Tax Agency has recently ruled on this in an unpublished binding answer. Specifically, the question is whether users must recognize their payment of bitcoins from the bankruptcy estate as income. The Danish Tax Agency assesses that this is not the case and that the payment is thus tax-free.

In its decision, the Danish Tax Agency places particular emphasis on the fact that the claim against the bankruptcy estate is not a monetary claim covered by the Danish Capital Gains Act, and that it was also documented that the person had reported the claim to the bankruptcy estate. Since 2014, when Mt. Gox went bankrupt, the price of bitcoins has increased by a multiple of approximately 100. The decision is therefore positive for the creditors who are being paid bitcoins these days.

It is then an independent question whether profits subsequently realized on the cryptocurrencies paid out are tax-free. This depends on whether the cryptocurrencies were acquired in speculation, which must be assessed in the individual case. If the bitcoins acquired were bought in speculation, in which case the difference between the acquisition price and the amount realized is taxable.

If you have any questions about any of the above, please contact lawyer Payam Samarghandi at payam@samarlaw.dk or 60793777.