Is Cryptocurrency Taxable?
If your investment in cryptocurrency falls within the concept of speculation under Danish tax law, your investment will be taxable under the State Tax Act when there is an intention to resell already at the time of purchase, and the resale is expected to take place with a view to making a gain.
In practice, it has proven very difficult for individuals to rebut this presumption of speculative intent. A gain on the sale of cryptocurrency will therefore, as a general rule, always be regarded as having occurred with speculation in mind and will therefore be taxable.
In very special situations, it has been accepted in practice that individuals can sell cryptocurrency tax-free. This has occurred in cases where the intention to speculate could be rebutted in the specific situation.
How is cryptocurrency taxed?
As a general rule, cryptocurrency (e.g. BTC, ETH, etc.) is taxed under the realisation principle. This means that taxation only occurs once you have sold your cryptocurrency.
The calculation of gains and losses on cryptocurrency must be carried out separately for each cryptocurrency. The calculation is based on the FIFO principle (First In, First Out), under which the units acquired first are treated as the ones sold first.
As a general rule, gains and losses must be calculated separately, meaning that a loss on one cryptocurrency cannot be offset against a gain on the same cryptocurrency or on another.
This has significant implications, as gains are taxed as personal income (excluding labour market contributions) at a tax rate of up to 52%, while losses are deductible as an itemised deduction with a deduction value of approximately 25%.
Example: A person with a gain of DKK 100.000 and a loss of DKK 100.000 (net gain of DKK 0) within the same income year, from trading bitcoin, will find themselves in a situation where they still have to pay tax. This is because gains and losses are taxed differently, and it is, as a general rule, not possible to offset the loss against the gain. The reason for this is that gains are taxed at up to 52% (personal income), while losses are deductible at a tax value of approximately 25% (itemised deduction). In this example, the investor would have to pay approximately DKK 27.000 in tax on a gain of DKK 0.
SkatteInform can assist with calculating the taxable income from your investment in cryptocurrency.
Exception to offsetting losses against gains
It appears from the Danish Tax Agency's website regarding cryptocurrency (bitcoin) that it is possible to offset losses against gains, provided that you do not purchase new bitcoin between your sales. This means that your bitcoin holding must always be reduced to 0 before you buy back in.
Example: A person who buys 10 bitcoin and sells 4 of them at a gain, and later sells 6 at a loss, can carry out a net calculation. This requires that:
- There must be no purchases between the sales
- This must take place within the same income year
- No offsetting of losses against gains can take place for other cryptocurrencies
Exchange/conversion between cryptocurrencies
Exchanging between cryptocurrencies is treated for tax purposes as a purchase and a sale. This means that if you exchange/convert Bitcoin to Ethereum, it will be regarded as a sale of Bitcoin and a purchase of Ethereum.
Not all cryptocurrencies are taxed the same – financial contracts
There are countless cryptocurrencies, and they are not all treated the same. It is therefore important to look into the specific cryptocurrency you have invested in. A cryptocurrency may be covered by a different set of rules than the State Tax Act, which can mean that the taxation rules differ. This applies, among other things, to stablecoins. For example, the cryptocurrency USDT, which is pegged 1:1 to the US dollar, is regarded as a stablecoin.
Stablecoins resemble financial contracts and are therefore covered by the provisions of the Capital Gains Tax Act. This means that stablecoins are taxed as capital income under the mark-to-market principle, i.e. tax is charged on the annual increase in value of both realised and unrealised gains. At the same time, any loss can also be deducted against capital income. Taxation of capital income is up to 42%.
Contact SkatteInform if you need assistance with this.
Have you been contacted, or have you received a letter from the Danish Tax Agency?
If the Danish Tax Agency has sent you a letter in the form of a proposed decision or a decision, it is, first and foremost, important that you consider whether you agree with the Danish Tax Agency's conclusion. The Danish Tax Agency may have made a discretionary increase to your income, or based it on claims that are not correct.
As a general rule, you have 2 weeks to submit your comments after receiving the proposed decision.
If you have received a decision, you have 3 months to appeal the decision. The appeal must be submitted to the Tax Appeals Agency, and the appeal fee is DKK 1.300 (2026). You may be entitled to full (100%) or partial (50%) cost coverage for an adviser, depending on whether you are successful to a substantial extent in the tax case.
Contact us for advice:
SkatteInform has extensive expertise assisting with the reporting of returns on investments in cryptocurrency. SkatteInform handles tax disputes for investors who have been unfairly taxed on investments in cryptocurrency.
You are always welcome to contact us for a no-obligation meeting if you would like a preliminary assessment of your tax case.
We will carry out a qualified assessment of the possibility of appealing and winning the tax case.
We will consider the costs involved in pursuing the case, and we will explain the rules on what you can have covered by the state in cost reimbursement.
We will inform you of the advantages and disadvantages of pursuing the case, so that you can decide whether you want to pursue it.
We are also happy to assist with your reporting to the Danish Tax Agency, so that you reduce the risk of a tax dispute.
Contact SkatteInform
Call us on: 33 32 10 10
Send us an e-mail at: Info@Skatteinform.dk
We accept no liability for decisions taken on the basis of this newsletter without prior individual advice. Nor do we accept liability for any errors or omissions.
