Denmark to Start Taxing Bitcoin Profits, Rules the Supreme Court

The Supreme Court of Denmark ruled that people should be subject to taxation when generating profits by selling bitcoin.

The legislation will apply to both investors and miners. 

The Court’s Decision

Højesteret – the third and final instance in all civil and criminal cases in the Kingdom of Denmark – announced on March 30 that investors who made any profits when selling bitcoin holdings will have to pay taxes. 

The magistrates claimed that people buy BTC, hoping to sell it at a higher price “for the purpose of speculation.” Therefore, according to local law, such transactions should not be classified as tax-free.

“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.”

Højesteret’s officials further determined that individuals who accumulated their bitcoin stash via cryptocurrency mining and later sold those possessions for a profit must also abide by taxation rules. 

Denmark is certainly not a tax haven and is known for its harsh policies. Investors whose profits do not exceed 58,900 DKK (approximately $8,630) are slammed with a 27% taxation rate on their capital gains, while those who earned more are required to pay a 42% cut.

The Central Bank is not Fond of BTC

Lars Rohde – the Governor of Danmarks Nationalbank (the central bank of Denmark) – is not keen on the primary cryptocurrency. 

He outlined its infamous volatility and lack of centralization in May 2021, adding that he is “tempered to ignore” BTC and the entire digital asset market. 

“It’s a very speculative asset at best. There is no stability and no guarantee from any side about the value of cryptocurrencies,” Rohde said.

Many of his colleagues, including Andrew Bailey (the Governor of the Bank of England) and Christine Lagarde (President of the European Central Bank), are also against the asset class. The former has previously warned investors to be utterly careful when entering the market as they could lose all their money. 

“They have no intrinsic value. That doesn’t mean to say people don’t put value on them, because they can have extrinsic value,” he added in his bashing manifest.

Lagarde has argued that cryptocurrencies are “worth nothing” and “based on nothing.” In her view, dealing with them could result in substantial losses since the sector lacks appropriate rules. 

On the other hand, the French politician is a huge proponent of CBDCs, believing they will be much different than bitcoin and could offer benefits to the financial system:

“The day when we have the central bank digital currency out, any digital euro, I will guarantee – so the central bank will be behind it, and I think it’s vastly different than many of those things.”