The Supreme Court of Denmark has ruled that profits made from the sale of cryptocurrencies such as bitcoin are taxable, in a pair of verdicts that uphold decisions of lower courts.
High Court Deems Crypto Gains Taxable Under Existing Law
The top court of Denmark has declared that earnings from the sale of cryptocurrencies must be subject to taxation, in two separate judgments announced on Thursday. Both cases were filed against the Danish Ministry of Taxation, and both confirm the decisions of courts at a lower level.
One of the cases involved a private individual who had acquired a certain amount of digital coins between 2011 and 2015, via purchases and gifts from third parties for the development of crypto-related software. The person sold the coins in 2017 and 2018 at a higher price.
The Supreme Court in Copenhagen ruled that the bitcoins were obtained for the purpose of speculation, and thus the proceeds of their sale could not be exempted from taxation under the State Tax Act. Furthermore, the cryptocurrency received as payment for services constituted a turnover for the individual’s non-business enterprise, thus triggering a tax liability.
The same applies to the second case, in which coins were 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 reads:
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.
The rulings that profits made from the sale of the cryptocurrency are taxable are likely to set a precedence regarding the tax treatment of crypto investments in the Scandinavian country.
National authorities in the European Union have been taking steps to clarify the taxation of crypto holdings and related profits. In December 2022, the Italian government introduced a 26% levy on capital gains from crypto trading. A few months earlier, Portugal unveiled plans to tax them at 28%. However, EU-wide regulations for crypto assets are yet to be enforced.
What do you think about the judgments of Denmark’s Supreme Court? Share your thoughts in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, ArDanMe / Shutterstock.com
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.