Denmark's Tax Council has proposed a new regulation to tax unrealized cryptocurrency gains and losses.
The proposed tax rate is approximately 42% and will apply to all crypto holders, regardless of whether they sell their assets.
The regulation aims to streamline and unify the taxation of digital assets.
The Tax Council, headed by Minister of Taxation Rasmus Stokland, has suggested three methods for taxing cryptocurrencies: capital gains tax, warehouse tax, and inventory tax.
The Council favors the inventory tax, which would treat digital and traditional assets as a single entity for annual taxation.
Minister Stokland stated that current tax regulations are unfair to crypto users, and the new system will address these issues.
The bill is set to be introduced to the Danish parliament next year, with potential implementation by 2026.
The bill also includes provisions for mandatory transaction reporting by crypto service providers to the European Union, in line with the Markets in Crypto-Assets (MiCA) law.
There is speculation that the law could apply retroactively, affecting long-term crypto holders who would be taxed on gains from previous years.
The proposed regulation has sparked debate within the crypto community, with concerns that it may force traders to sell assets to avoid the tax.
Similar proposals have been discussed in other countries, including Italy and the United States.
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