Denmark 🇩🇰

Classification of Cryptocurrencies:

In Denmark, cryptocurrencies are considered personal assets rather than currencies like the Danish Kroner or the Euro. Therefore, profits from the sales and disposals of cryptocurrencies are subject to income tax, not capital gains tax.

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Taxation of Cryptocurrency:

• Income Tax Rates: Income from cryptocurrencies and other sources is subject to national income tax, municipal tax, labor market tax, and church tax. The tax rates vary depending on income levels and municipality.
• Bottom Bracket and Top Bracket Tax: All Danish tax residents pay bottom bracket tax on their first 552,000 DKK income. Income above this threshold is taxed at a flat rate of 15%.
• Local Taxes: Local taxes include municipal tax and labor market tax. Municipal tax varies depending on the municipality, while labor market tax is a flat rate of 8%.
• Church Tax: If an individual is a member of the Danish State Church, they pay an additional Church Tax on their income, including income from cryptocurrencies. The average Church Tax is around 0.70%.
• Effective Tax Rate: The average effective income tax rate in Denmark, including all taxes mentioned above, is estimated to be 37%. However, this may vary based on income level and municipality.

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Calculating Gains and Losses:

To calculate gains and losses from cryptocurrency transactions, use the formula: Gain/Loss = Proceeds - Cost Basis. The cost basis is the amount paid to acquire the cryptocurrency, including acquisition fees, and the proceeds are the amount received from disposing of the cryptocurrency, including disposal fees.

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• FIFO Principle: When selling a portion of the cryptocurrency acquired in multiple transactions, the First In First Out (FIFO) principle should be applied. The purchase price of the first acquired cryptocurrency should be used to calculate the taxable profit or loss.
• Exceptional Offsetting of Loss: In certain cases where an individual buys and sells cryptocurrencies without acquiring more in between, a net calculation may be allowed. Otherwise, losses cannot be offset against profits from different types of cryptocurrencies bought and sold within the same income year.
• Tracking and Reporting: The Danish Tax Agency has the ability to track cryptocurrency transactions and has requested information from cryptocurrency exchanges in the past. Transactions on public blockchains are also visible, and tax agencies use data-matching techniques to associate wallets with individuals.

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Moving to or from Denmark:

• Moving to Denmark: Individuals moving to Denmark should request a binding ruling from the Danish Tax Agency to understand how their stock of cryptocurrencies will be considered for tax purposes.
• Leaving Denmark: When leaving Denmark and no longer having a tax liability, the stock of cryptocurrencies is considered sold at market value on the day of departure. Profits or losses resulting from the difference between the value at the time of purchase and the value on the day of departure should be reported in the tax assessment notice.

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Reporting Profits and Losses:

Profits from cryptocurrency investments should be reported as personal income, while losses can be deducted. The tax rate on profits is approximately 53%, and losses are deducted at a rate of around 28%, up to the deductible allowance.

https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/canada

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https://www.samarlaw.dk/en/the-ultimate-guide-to-bitcoin-taxation/

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https://research-api.cbs.dk/ws/portalfiles/portal/60993154/louisefjordkjrsgaardetaltaxationofcryptocurrencies_publishersversion.pdf

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https://coinledger.io/guides/crypto-tax-denmark

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https://www.azets.dk/eng/news/bitcoins/

https://skat.dk/data.aspx?oid=2291754

The information provided in this collection of crypto country tax rates is intended for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the information, it should not be relied upon as legal or financial advice.

Tax laws and regulations are subject to change and can vary significantly from country to country, and even within different regions of the same country. The tax rates and guidelines mentioned in this collection may no longer be current or may not apply to your specific situation.

It is important to consult with qualified tax professionals, accountants, or financial advisors who are knowledgeable about the tax laws in your specific jurisdiction. They will be able to provide you with personalized advice tailored to your circumstances and keep you informed of any recent updates or changes in tax regulations.

Furthermore, the information provided in this collection does not constitute an endorsement or recommendation of any specific tax strategy or course of action. The tax rates and guidelines mentioned are meant to serve as a starting point for your research, but it is essential to conduct thorough due diligence and seek professional advice before making any decisions regarding your tax obligations.

We disclaim any liability for any loss or damage incurred by individuals or entities relying on the information provided in this collection. By using this collection, you agree to release us from any claims, demands, or damages arising out of or in connection with the use of this information.

Please note that the collection of crypto country tax rates does not cover all jurisdictions and should not be considered exhaustive. It is your responsibility to stay informed about the tax laws and regulations applicable to your specific circumstances.

Always consult with qualified professionals and refer to official government sources for the most up-to-date and accurate information regarding tax rates and regulations.

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