Profits from the sale of cryptocurrencies such as bitcoin are taxable, according to two Danish Supreme Court rulings. The verdicts in the cases, which involve cryptocurrency purchases and payments, as well as income received from bitcoin mining, uphold the decisions of lower courts.
Danish High Court finds crypto profits taxable under current law
Profits made from the sale of bitcoin are taxable in Denmark, the country’s Supreme Court has decided in two separate rulings Announced Thursday. Both decisions are found in lawsuits filed against the Danish Ministry of Finance and uphold verdicts rendered by lower courts.
In one of the cases, the plaintiff acquired a certain amount of digital currencies between 2011 and 2015, through purchases and donations from third parties for the development of cryptocurrency-related software. The individual sold them in 2017 and 2018 at higher prices.
According to the Copenhagen court, the bitcoins were obtained for speculative purposes and therefore their sale cannot be tax-exempt under the State Tax Act. Then, the crypto received as payment constituted a billing for the man’s non-commercial company, which also generated tax liability.
The same applies to the other 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 part of the cryptocurrencies obtained at a profit in 2018. A statement cited by Bloomberg , elaborates:
The Supreme Court assumes that bitcoin is generally only acquired with a view to selling it and, to some extent, using it as a means of payment.
Decisions that profits made from the sale of cryptocurrency are taxable are likely to set a precedent for the tax treatment of cryptocurrency investments in the Scandinavian country.
National authorities in the European Union have been taking steps to clarify the taxation of cryptocurrencies and related profits. In December 2022, the Italian government introduced a 26% tax on capital gains from cryptocurrency trading. A few months earlier, Portugal unveiled plans to tax them at 28%. However, EU regulations for crypto assets have not yet been applied.
What do you think of the judgments of the Danish Supreme Court? Let us know in the comments section.
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