According to the Bloomberg report, Denmark is cracking down on crypto traders after finding two-thirds of local transactions made using Bitcoin and other cryptocurrencies aren’t properly taxed. On Tuesday, the Danish tax ministry said that Denmark’s existing tax code, which is roughly a century old, isn’t designed to deal with the challenges posed by crypto assets. It cited a heightened risk of fraud as well as widespread errors in filings.
Denmark plans to update its financial regulations to include crypto.
Denmark will start by defining the specific challenges that cryptocurrencies pose to taxation authorities and then decide what to change in the legislation. In its statement, the ministry noted that the current code “dates back to 1922 and therefore doesn’t take financial cryptocurrencies into account.” Morten Bodskov, the country’s tax minister, said the goal is to be “vigilant and ensure that our rules are up-to-date and limit errors and fraud.” Cryptocurrency regulations and taxing crypto incomes have been a concern of authorities across countries for some time now.
16,000 people and companies in Denmark traded cryptocurrencies between 2015-19.
16,000 people and companies in Denmark traded cryptocurrencies between 2015 and 2019. Of those transactions, 67% weren’t accompanied by an accurate tax filing. In February, the Danish Tax Agency said it had collected $4.9 million from crypto investors and reported 48 people to its crimes unit, based on a suspicion that they’d violated the country’s tax code. Denmark is not the only country that is looking to tax crypto incomes. Earlier, South Korea had passed legislation that puts a 20% tax on crypto incomes. The law will come into effect starting next year. Several other countries are also planning to tax crypto incomes.