The vast majority of people in Denmark are taxable on their cryptocurrency profits. However, there are exceptions. This has been confirmed by the Danish Tax Appeals Board in a recent decision where a person was found to be tax exempt on a multimillion-dollar cryptocurrency gain.
The question of whether you are taxable on your cryptocurrency profits depends on whether you have acquired your cryptocurrency as part of speculation. That is, whether you had a resale intention at the time of acquisition.
According to administrative practice and case law, it is generally considered that you have purchased cryptocurrency as part of speculation. This is because the authorities and the courts generally consider cryptocurrency to be a speculative object.
However, the Supreme Court has ruled that each case must be assessed individually.
Since 2020, we have been conducting a case on behalf of a client whose cryptocurrency profits were deemed taxable in 2021 by the Danish Tax Agency.
The decision was appealed to the Tax Appeals Board, which at the end of 2023 reversed the Tax Agency's decision and found that the person was tax exempt on his realized profits on cryptocurrency.
In its assessment, the Tax Appeals Board attached particular importance to the fact that the person had purchased cryptocurrency at an early stage (2011), for a low amount (approximately €400), and that he had used a not insignificant part of his cryptocurrency as a means of payment.
On this basis, the Tax Appeals Board found that the profits totaling approximately DKK 1.5 million were tax exempt.
The decision has now been brought before the courts at the initiative of the Ministry of Taxation.
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.
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