1. Introduction

In recent years, with the rapid development of the crypto-asset market and the international community’s interest in crypto-assets As awareness continues to deepen, the attitudes of various countries and financial institutions towards crypto-assets are also gradually evolving. Initially, Danske Bank took a negative stance on crypto-assets and discouraged customers from investing in cryptocurrencies to avoid facilitating money laundering and other financial illegal activities. However, over time, Denmark has gradually shown a receptive attitude towards crypto assets.

The Danish Tax Council recently proposed that unrealized cryptocurrency gains and losses be included in the tax scope starting in 2026, aiming to bring the cryptocurrency tax system into line with other harmonize with existing regulations on investment products such as stocks, bonds, etc. This article will introduce Denmark’s crypto tax and regulatory system in order to help readers better understand Denmark’s current crypto assets and their transformation background.

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2. Overview of the Danish basic tax system

2.1 Danish tax system

Denmark is a typical developed country with high taxes and high welfare . According to statistics from the Organization for Economic Co-operation and Development (OECD), among member countries, Denmark ranks first in terms of tax revenue as a proportion of its gross product (GDP), reaching about 46.3%. The parliament plays a legislative role in Denmark's tax system. All tax laws can only become effective and promulgated after being signed by the Queen and at least one cabinet minister. Tax management is the responsibility of the Danish Tax Ministry, which has several functional agencies, the National Tax Tribunal and the Tax Administration Center (SKAT). It is worth noting that Denmark’s self-governing territories, the Faroe Islands and Greenland, enjoy independent tax systems and are not subject to the Danish domestic tax system.

The Danish tax system is similar to the Italian tax system we introduced before. Both tax systems are mainly divided into two categories: direct taxes and indirect taxes. In Denmark, direct taxes refer to taxes deducted directly from taxpayers’ income, covering corporate income tax, personal income tax, labor market surtax, church tax, property assessment tax and property tax, etc. Indirect taxes are taxes paid by taxpayers when purchasing goods or services, which mainly include increasedValue tax, tariff, carbon emission tax and consumption tax, etc.

2.2 Main tax types in Denmark

2.2.1 Personal income tax

In Denmark, any individual who resides for more than 6 months is required to pay tax to Denmark. For individuals residing in Denmark, they are subject to full tax liability. Generally speaking, the types of taxes that individuals pay include state tax, municipal tax, labor market tax and church tax. Denmark implements a progressive tax rate system for individuals' salary income and capital gains, and this tax rate will vary depending on the city of residence. The highest tax rate can reach 52.07%.

(1) State tax: A progressive tax system is adopted, divided into two levels: minimum tax and maximum tax, levied according to personal income. The minimum tax base is calculated as personal income plus positive net capital income. In 2024, the minimum tax rate corresponding to this tax base is 12.01%. For single persons, the maximum tax base is also made up of personal income plus positive net capital income. However, when calculating the maximum tax, an 8% labor market tax will be deducted first, and then a 15% tax rate will be levied on the amount exceeding DKK 588,900 (2024 standards).

(2) Municipal tax: Local income tax, also known as municipal tax, is calculated based on taxable income and adopts a unified tax rate. This tax rate will Varies depending on the city. According to 2024 data, the national average municipal tax rate is 25.067%.

(3) Labor market tax: The tax rate is 8% of personal income.

(4) Church tax: Church tax is levied at a uniform rate and varies according to the city where it is located. The nationwide average church tax in Denmark in 2024 will be approximately 0.65%. This tax is levied by the municipality, but it is only levied on members of the Danish Church (i.e. the Lutheran Church). When registering in Denmark, each individual needs to clearly indicate whether he or she should be included in the collection of church tax.

(5) Share tax: According to Denmark’s regulations on share income in 2024, if the amount of share income does not exceed 122,000 Danish kroner (this standard applies to already Married couples) are taxed at a rate of 27%. Once share income exceeds this amount, the tax rate on the excess increases to 42%.

(6) Other taxes: This is mainly for foreigners, such as scientists working in Denmark or dispatched in Denmark, who can apply for 27% of their total salary. % flat tax rate, the preferential period can last up to 84 months, but there are many conditions for its recognition. Additionally, the 27% flat rate does not cover all income but is calculated based on cash wages, employer-provided phone/internet service, the taxable value of company cars, and employer-paid taxable health insurance. All other income will be taxed in accordance with normal tax rules. It is important to note that no deductions are allowed from income subject to flat tax rates. At the same time, after 84 months, its income will no longer enjoy the flat tax rate preferential treatment, but will be taxed at the ordinary tax rate.

2.2.2 Corporate income tax

According to Danish tax law, any company incorporated in Denmark Companies are regarded as Danish tax residents, which means that all their income needs to be included in the tax scope. Denmark's corporate income tax rate for ordinary companies is 22%, but only depreciation and expenses directly related to company operations are allowed to be deducted from taxable income. When determining taxable income, tax deductions and tax depreciation must first be excluded from the company's total income. It is worth noting that since operating costs and depreciation can be deducted from the tax base, the actual tax burden of the company may be lower than the statutory 22% tax rate.

In addition, according to the provisions of Danish tax law, the tax treatment of permanent establishments (PE) and real estate located abroad follows the territorial principle. This means that Danish companies are not taxed on their worldwide income. Conversely, income from a permanent establishment outside Denmark or income from real estate abroad is not included in Danish taxable income. Non-resident companies are taxed only on profits derived from income derived in Denmark. The corporate income tax rate is the statutory 22%.

2.2.3 Value-added tax

Denmark levies a tax on goods and services sold and imported within the country Value-added tax, the standard rate is 25% of the tax-exclusive price of goods or services. However, exported goods and services are exempt from the tax. In addition, Denmark also implements VAT exemptions for some specific services, covering finance, insurance, medical care, education, passenger transportation and other fields.

For those enterprises that are engaged in VAT-exempt business, they do not need to register and pay VAT, but accordingly, they cannot conduct such business. procuredApply for VAT refund on raw materials or services. For enterprises engaged in businesses with a tax rate of 0, although they need to register for VAT, they do not need to actually pay VAT, and they do not need to include VAT in the pricing of goods or services. At the same time, such enterprises also have the right to apply for a refund of the value-added tax included in the goods or services provided by their suppliers.

2.2.4 Consumption tax

In Denmark, only when goods are sold or brought into the country Only when consumption tax is required. Any company that brings goods into Denmark or produces goods in Denmark must first register with Danish tax in order to fulfill its obligation to pay excise tax. Excise tax is levied on specific goods, including but not limited to petroleum products, specific types of packaging materials, alcoholic beverages, tobacco, chocolate and candies, coffee, etc.

Denmark’s consumption tax rates vary depending on the product category. For alcoholic beverages, the tax rate is divided into two levels: spirits with an alcohol content of more than 22%, the tax rate is 100%; and alcoholic drinks with an alcohol content of less than 22%, the tax rate is 50%. As for tobacco products, tax rates also vary depending on the type. It is worth noting that excise taxes on Danish tobacco products are levied at the production stage.

3. Danish crypto taxation

3.1 Denmark’s characterization of cryptocurrency

In Denmark, the Financial Supervisory Authority issued a statement in December 2013 confirming that Bitcoin (and other cryptocurrencies) are not currencies, and in March 2014, the Danish Central Bank issued His own statement announced much the same thing. The Danish Tax Board finally ruled in early 2018 that crypto trading profits were taxable, meaning that cryptocurrencies were considered a speculative asset. Cryptocurrencies were considered a high-risk investment vehicle in Denmark. There was a lack of clarity at this time. There is no official regulatory agency to manage and regulate the regulatory framework, and investors need to bear their own investment risks. ‌‌

3.2 Current status of crypto taxation in Denmark

3.2.1 Overview of current status

< p style="text-align: left;">Denmark treats cryptocurrency gains as capital income and requires investors to evaluate their crypto asset portfolios annually. Denmark, meanwhile, allows investors to use investment losses to offset gains.

In addition, Denmark also plans to bring crypto assets into the same tax rule system as traditional investment products, aiming to harmonize the tax system of cryptocurrencies with existing rules for other investment types such as stocks and bonds. For example, the anti-thin capitalization investment rules in Denmark’s existing tax rules Rule) refers to reducing the tax base by restricting companies from using borrowings instead of equity financing, thereby preventing companies from avoiding taxes through thin capitalization. Specifically, if the company's debt-to-equity ratio is too high, the tax department may adjust its tax treatment. To ensure tax fairness‌ or the controlled foreign company rule, which applies to companies with control in Denmark. Controlled foreign companies established. If these companies fail to repatriate profits to Denmark under certain circumstances, the Danish tax authorities may treat these unrepatriated profits as Danish source income and tax them‌. The harmonized rules are primarily intended to strengthen Denmark’s control over the crypto industry and reduce the original complexity of taxing crypto assets that has grown in the cryptocurrency market in recent years. Against the background of rapid development, Denmark They attach great importance to tax issues in this emerging field. To this end, they have been actively and in-depth studying the tax system of the crypto industry. This series of efforts has ultimately led to the smooth introduction of new proposals for taxing unrealized capital gains on crypto assets. ‌‌

3.2.2 Unrealized Gains Tax

Denmark In an innovative attempt, its Tax Law Committee has released a tax law proposal for cryptocurrency assets. The formal legislative process is expected to start in early 2025, when the Minister of Taxation will submit the relevant bill to Parliament. The proposal is expected to be implemented from 2026. Effective January 1, market price-based taxation on crypto assets will be implemented system to impose taxes of up to 42% on unrealized gains in cryptocurrencies. It is worth noting that this proposal comes against the backdrop of rising cryptocurrency usage in Denmark, and it plans to apply retroactively to Bitcoin since 2009. Crypto assets acquired since the coin’s inception, while allowing investors to use investment losses to offset gains.

The proposal, fully spelled out in a detailed 93-page comprehensive report, aims at aligning the taxation regime for crypto-assets with those of traditional financial instruments. Consistent while addressing the many long-standing challenges in the crypto industry, Danish Tax Minister Rasmus Stoklund emphasized the need for this reform, noting the challenges faced by cryptocurrency investors under current regulations. Unfair tax burdenproblem. Minister Stocklund said: "In recent years, cryptocurrency investors in Denmark have often suffered from heavy taxes. The recommendations made by the committee can ensure a fairer and more reasonable taxation of the gains and losses of cryptocurrency investors." < /p>

4. Danish Crypto Regulatory Framework

4.1 "Financial Business Law"

< p style="text-align: left;">According to the Financial and Commercial Law (Danish: lov om finansiel virksomhed) Denmark has set strict access conditions for companies to get involved in the crypto asset market, requiring companies to obtain authorization before providing crypto asset services, and must notify the Danish Financial Supervisory Authority at least 40 working days before providing services for the first time. . In addition, under Chapter 9 and Section 181 of the Regulations, if a business operates as a financial holding company or a mixed holding company, it is also required to follow a specific registration process. When it comes to amending the company's articles of association, such financial companies are required to submit a dated copy of the company's articles of association to the Danish Business Administration, which should contain all new amendments. The Danish Business Authority will then forward this copy to the Danish Financial Supervisory Authority. This series of strict registration and authorization control measures aims to prevent potential risks from the source and lays a solid foundation for the future development of the crypto asset industry.

In addition, the law further emphasizes that if a company chooses its headquarters or registered address in Denmark simply to avoid legal supervision in the region where its main customers are located, Danish financial The Supervisory Authority will reject its authorization application in accordance with the law. This strict regulation effectively maintains the standardized development of the Danish encryption industry, reduces legal risks that may be caused by foreign companies, and provides a more solid and comprehensive guarantee for the legitimate rights and interests of relevant companies and employees.

In order to respond to risk management needs more efficiently and quickly, the regulation gives the Danish Financial Supervisory Authority (or other Danish institutions authorized by law) special powers to enter into asset-backed channels at any time without the need for a court order. Cryptocurrency assets other than certificates and electronic currency tokens business premises of an asset service provider, and requires individuals involved in crypto-asset transactions (also excluding asset-backed tokens and electronic currency tokens), issuers of asset-backed tokens, issuers of electronic currency tokens, and crypto-asset service providers Cooperate with suppliers to provide information and conduct necessary inspections. This measure aims to more effectively regulate the crypto-asset industry, severely crack down on illegal activities, and ensure that the asset security of crypto investors is not violated.

4.2 "Danish Alternative Investment Fund Managers Act"

If the "Financial and Commercial Law" focuses on prevention beforehand and monitoring during the incident, then the "Danish Alternative Investment Fund Managers Law" (Danish: lov om forvaltere af alternative investeringsfonde) is more Focus on the supervision of events that have occurred and may harm the rights and interests of crypto investors. According to this law, the Danish Financial Supervisory Authority has the power to implement full or partial revocation of the license of alternative investment fund managers, and even ban the marketing activities of alternative investment funds managed by them. These stringent measures apply in a variety of situations, including but not limited to: obtaining a license based on false information or any other fraudulent means; violating the provisions of the Anti-Money Laundering Act; and failure to actually use the authorization within 12 months of being granted. wait.

At the same time, in order to prevent conflicts of interest, the regulations stipulate that alternative investment fund managers should establish a risk management function, which should be functionally and hierarchically aligned with the operating units (including portfolio management functions) and is able to consistently and effectively identify, measure, manage and monitor all risks associated with the investment strategy, objectives and risk profile pursued by each alternative investment fund managed.

If members of the management of an alternative investment fund manager fail to take necessary measures when a significant loss occurs or there is an imminent risk of significant loss, they will be fined or fined up to 4 months' imprisonment, provided that no higher penalty is warranted under other laws. A person associated with an alternative investment fund manager provides false or misleading information to a public body, the public, any body corporate or the manager or investors in an alternative investment fund managed by the manager, or is guilty of gross or repeated negligence or Negligence, which may result in losses for investors, may result in a fine or imprisonment of up to 4 months. .

It can be seen that this regulation adopts a more stringent attitude in post-processing. Severe punitive measures can effectively curb behaviors that harm the interests of crypto investors, help maintain good order in the crypto industry, strengthen the preventive role of the law, and further strengthen the supervision of the crypto industry.

4.3 "Anti-Money Laundering and Terrorist Financing Preventive Measures Law"

"Anti-Money Laundering and Terrorist Financing Preventive Measures Law" The Terrorist Financing Prevention Measures Act (Danish: lov om forebyggende foranstaltninger mod hvidvask og finansiering af terrorisme) provides that if a company or individualYou must notify the Money Laundering Secretariat immediately if you know, suspect or have reasonable grounds to suspect that a transaction, funds or activity is related to money laundering or terrorist financing. The same applies to suspicions arising from inquiries from customers attempting to conduct transactions or from potential customers wishing to conduct transactions or activities. Crypto-asset related transactions and investment activities are also under the supervision of the Anti-Money Laundering and Terrorist Financing Preventive Measures Act.

The Anti-Money Laundering Secretariat is operationally independent and independent. The central unit, the Anti-Money Laundering Secretariat, is tasked with: receiving and analyzing suspicious transaction notifications and other information related to money laundering, related predicate offenses or terrorist financing; and reporting to the competent authority in cases of suspicion of money laundering, related predicate offenses or terrorist financing. Authorities, institutions and groups disseminate the results of their analysis and any other relevant information; the Anti-Money Laundering Secretariat is responsible for preparing and updating risk assessments in the field of anti-money laundering, in cooperation with other institutions, to identify, assess, understand and limit current money laundering risks, etc.

This approach reflects Denmark’s firm determination and efficient execution of combating money laundering and terrorist financing activities. By requiring companies and individuals to promptly report suspicious situations, monitoring and early warning capabilities for this type of criminal behavior can be greatly enhanced. At the same time, the independence and professionalism of the Anti-Money Laundering Secretariat also ensures its fairness and accuracy when handling relevant information. In addition, through close cooperation with other institutions, a more comprehensive and effective anti-money laundering network can be formed to further enhance the level of financial security. Overall, this approach is of great significance to maintaining financial order and social stability.

4.4 Other regulatory measures

Denmark has officially announced that starting from 2027, it will Work on the exchange of Danish cryptocurrency investor data at an international level. Additionally, they expect to introduce a new bill in early 2025 that will force cryptocurrency service providers to report customers’ transaction details to authorities. The move aims to strengthen supervision of the approximately 300,000 cryptocurrency investors in Denmark and effectively curb possible tax evasion.

For this decision, it can be seen that Denmark has taken active and forward-looking measures in maintaining the encryption tax order and ensuring financial security. Denmark hopes that through international data exchange, it can more comprehensively grasp the trading dynamics of cryptocurrency investors and provide more accurate information support for tax supervision. At the same time, it requires service providers to report transactions, which further strengthens the supervision of cryptocurrency transactions, helps to promptly detect and deal with potential tax evasion issues, and is important for maintaining Denmark’s crypto tax fairness and financial stability.significance.

5. Summary and Outlook

In terms of tax system, Denmark has , a groundbreaking proposal to tax unrealized gains on crypto assets and explicitly stipulate that crypto investors can use investment losses to offset gains. This measure is intended to potentially alleviate the current tax injustice problems faced by cryptocurrency investors, but it may cause problems such as tight cash flow for investors and distort investors’ long-term investment decisions. Therefore, Denmark needs to carefully weigh various factors when implementing this proposal to ensure that it can not only effectively solve the problem of tax injustice, but also avoid unnecessary negative impacts on investors and the market. Its actual results are highly anticipated by all sectors of society. .

At the regulatory level, Denmark has adopted a series of sophisticated and comprehensive measures for the encryption industry, aiming to create a healthy and orderly development environment for the encryption industry. First of all, by strictly standardizing the company registration and authorization process, Denmark strives to ensure that all companies engaged in encryption business meet legal requirements and control the quality of the industry from the source. On this basis, Denmark has also decentralized regulatory powers, allowing relevant departments to flexibly conduct inspections at any time to ensure compliance during corporate operations. Denmark has implemented a layered penalty mechanism for violations of regulatory regulations. Minor violators may face service suspension or fines as a warning; serious violators may face severe sanctions such as license revocation or even imprisonment, which effectively deters potential violations. Through this series of measures, Denmark not only effectively limits various risks that may occur in the encryption industry, but also maintains the stability and security of the financial system.

We firmly believe that Denmark will continue to strengthen and improve the tax and legal framework for crypto assets in the future. This move is a key step in driving the Danish crypto industry to mature. . At the same time, Denmark will continue to improve its regulatory structure and continuously improve the effectiveness of supervision in the encryption field to safeguard the stability and market order of the financial market. Denmark is making steady progress towards building an environment conducive to the healthy growth of cryptocurrency. Through this series of arrangements, Denmark is expected to play a more active role in the global cryptocurrency arena and contribute to the standardization and prosperity of the industry.