Denmark will start taxing Bitcoin profits, the Supreme Court decides
Denmark’s Supreme Court ruled that people should be subject to taxation when they generate profits by selling bitcoin.
The legislation will apply to both investors and miners.
The court’s decision
The Supreme Court – third and last instance in all civil and criminal cases in the Kingdom of Denmark – announced March 30 that investors who made a profit from selling bitcoin holdings must pay taxes.
The judges argued that people buy BTC, hoping to sell it at a higher price “for speculative purposes.” 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 selling and to a limited extent used as a means of payment.”
Supreme Court officials further ruled that individuals who accumulated their bitcoin holdings via cryptocurrency mining and later sold those assets for a profit must also comply with tax rules.
Denmark is certainly not a tax haven and is known for its harsh policies. Investors whose profits do not exceed DKK 58,900 (about US$8,630) are taxed at a 27% tax rate on their capital gains, while those who earned more have to pay a 42% cut.
The central bank is not fond of BTC
Lars Rohde – the governor of Danmarks Nationalbank (Denmark’s central bank) – is not concerned with the primary cryptocurrency.
He outlined the notorious volatility and lack of centralization in May 2021, adding that he is “courageous to ignore” BTC and the entire digital asset market.
“It is a very speculative resource 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 (the President of the European Central Bank), are also against the asset class. The former has previously warned investors must be very careful when entering the market as they can lose all their money.
“They have no intrinsic value. That’s not to say that people don’t value them, because they can have extrinsic value,” he added in his bashing manifesto.
Lagarde has claimed that cryptocurrencies are “worth nothing” and “based on nothing”. In her view, dealing with them can lead to significant losses since the sector lacks appropriate regulations.
On the other hand, the French politician is a big proponent of CBDC, believing they will be much different from bitcoin and can 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 stand behind it, and I think it’s very different than a lot of these things.”
