Denmark’s Supreme Court Imposes Tax on Bitcoin Profits
- The Supreme Court of Denmark ruled that the decision applies to miners who decide to sell their bitcoin after mining.
- Denmark joins India among the growing list of countries imposing taxes on digital assets.
- Regulators in Europe have called for collective policies to regulate crypto assets, which they believe pose a great investment risk to the public.
The Supreme Court of Denmark has ruled that profits made from Bitcoin should be subject to tax. The ruling applies to both Bitcoin miners and investors. The decision was announced on Thursday, March 30th, and demands that individuals who profit from selling bitcoins obtained through donations or purchases report such sales as a taxable event. The court also determined that the ruling would extend to Bitcoin miners who mined and sold their coins and later sold them.
The court claimed that people purchase Bitcoin aiming to sell it at a higher price “for the purpose of speculation.” The magistrate noted that “the Supreme Court assumes that bitcoins are generally only acquired with a view to being sold and, to a limited extent, to be used as a means of payment.”
According to the ruling,
The Supreme Court finds that the received Bitcoins must be considered assets acquired with a view to later turnover as an integrated part of [the first party’s] business with the development and operation of software for Bitcoins. They cannot be considered at the time of sale to have been transferred to be [their] private property or assets. On that basis, the Supreme Court finds that the relinquishment of the Bitcoins received constituted revenue in [their] non-commercial business. Sales therefore trigger tax liability.
The court noted that the rule applies to BTC acquired between 2011 and 2013 and sales that took place between 2017 and 2018. Denmark is renowned for its strict policies and is undoubtedly not a tax haven. Capital gains are subject to a 27% tax rate for investors whose profits do not exceed 58,900 DKK (roughly $8,630) and a 42% tax rate for those who earned more.
Like in some other countries, several Danish lawmakers have expressed concerns about Bitcoin. In 2021, Lars Rohde, the Governor of Denmark’s Nationalbank criticized Bitcoin due to its high volatility and lack of centralization. Rohde, at the time, described Bitcoin as “a very speculative asset at best.” He added that “there is no stability and no guarantee from any side about the value of cryptocurrencies.”
US regulators have also expressed similar sentiments. The SEC recently issued a notice warning US investors of the dangers of investing in digital assets like cryptocurrencies. The SEC claimed that some crypto service providers are not complying with US securities laws and therefore are risky.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
