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The Supreme Court of Denmark has decided to tax Bitcoin gains

Two instances involving cryptocurrency investors who cashed out via purchases of Bitcoin “made for the purpose of speculation” or “made for the purpose of mining” were decided by the country’s highest court.

Two decisions have been passed down by the Justices of the Supreme Court of Denmark, which is known as Højsteret. The decisions concern whether or not the selling of bitcoin under certain conditions constitutes a taxable transaction.

The Supreme Court of Denmark issued a notice on March 30 stating that a party that obtained earnings from selling Bitcoin acquired through several purchases and contributions was required to record the sale as a taxable event. The notice also stated that the purchase was made with the intent to speculate. The court determined in a different case that a user who mined their own Bitcoin and later sold the coins would be subject to the same tax consideration.

According to the prosecutor, individuals purchase bitcoin with the intention of later selling it at a greater price. Therefore, according to the legislation of the jurisdiction, transactions of this kind should not be regarded as being immune from taxation.

Both of the instances that were reviewed by the Supreme Court involved the purchase of Bitcoin between 2011 and 2013, followed by its selling between 2017 and 2018, indicating that there was a significant price difference between the two years. The court stated that it had considered the first seller’s purpose to ultimately sell the coins based on a statement made in a 2011 Bitcoin website, and it referenced specific portions of the country’s National Tax Act to support its argument.

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.

said the Court ruling

In no way can Denmark be considered a tax refuge, and the country is widely known for its stringent regulatory practises. Investors whose profits do not surpass 58,900 Danish Krone (approximately $8,630) are subject to a capital gains taxation rate of 27%, while investors with greater earnings will pay 42% in taxes.

author avatar
Alex
Formally freelance blogger Alex is passionate writer with interest in Finance and Business, fascinated about crypto following news and covering stories.
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