The Danish Supreme Court has issued a ruling stating that profits made from Bitcoin trading must be taxed and that investments in the cryptocurrency are speculative in nature. The verdicts are expected to set a precedent for cryptocurrency investments in Denmark.
“The Supreme Court assumes that bitcoins are generally only acquired with a view to being sold and, to a limited extent, to be used as a means of payment.”
The court made the decision based on two separate cases involving Bitcoin profits. In the first case, an entity purchased Bitcoin from third parties and received some BTC as gifts between 2011 and 2015.
The entity later sold these assets for a profit in the years 2017 and 2018.
Based on these occurrences, The Danish Court determined that the purchase of the cryptocurrency had a speculative nature, meaning it was an investment that involved a high degree of risk, and that the operation should not be exempt from taxation.
In the second case, the court ruled that Bitcoin earnings from mining constitute revenue, and therefore miners must also pay taxes if they sell their cryptocurrencies for a profit.
In addition, the supreme court also decided that BTC received as gifts or through mining “constituted turnover in their non-commercial businesses.”
Can This Expand To The Rest of Europe?
The recent decisions by the Supreme Court could set a precedent for cryptocurrency investments in Denmark.
In 2018, the Danish tax agency reported that it had identified 2,700 individuals who should pay taxes on their Bitcoin gains.
According to the agency, Danish citizens bought and sold Bitcoin through a Finnish exchange between 2015 and 2017 but did not declare any profits or losses to the tax authorities.
The Supreme Court’s verdicts support the decisions of lower courts, and the court assumes that Bitcoins are generally acquired only for the purpose of being sold and, to a limited extent, for use as a means of payment.