Denmark's Supreme Court has determined in two separate rulings announced on Thursday that profits from the sale of bitcoin are taxable, confirming verdicts issued by lower-instance courts in lawsuits filed against the Danish Ministry of Taxation. In one of the cases, a private individual acquired a certain amount of digital coins between 2011 and 2015 through purchases and donations from third parties for developing crypto-related software. The individual then sold the coins at higher prices in 2017 and 2018. The Copenhagen court ruled that the bitcoins were obtained for speculative purposes, and thus their sale cannot be exempted from taxation under the State Tax Act. Additionally, the court noted that the crypto received as payment constituted turnover for the individual's non-business enterprise, triggering tax liability.
The other case involved coins paid as a reward for providing computing power for the mining of digital currencies between 2011 and 2013. The miner sold some of the earned crypto at a profit in 2018. A statement quoted by Bloomberg elaborated, "The Supreme Court assumes that bitcoin is generally only acquired with a view to being sold and, to a limited extent, to be used as a means of payment." These rulings, which establish that profits from the sale of cryptocurrencies are taxable, are expected to set a precedent for the tax treatment of crypto investments in Denmark.
Across the European Union, national authorities have been working to clarify the taxation of crypto holdings and related profits. In December 2022, the Italian government introduced a 26% tax on capital gains from crypto trading. A few months earlier, Portugal announced plans to tax crypto profits at a 28% rate. However, EU-wide regulations for crypto assets have not yet been enforced.
In conclusion, Denmark's Supreme Court rulings on the taxability of profits from bitcoin sales underscore the growing need for clarity on the treatment of cryptocurrencies within the legal and financial systems. With countries across the European Union taking steps to define taxation guidelines for crypto holdings and related profits, it is increasingly important for investors and authorities alike to understand the implications of these emerging financial assets. As governments continue to grapple with the rapidly evolving world of digital currencies, it is likely that additional regulations and guidelines will be introduced in the near future.
Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.