COPENHAGEN: No one pays more tax, as a percentage of GDP, than the Danes. So in the country with the world’s highest tax burden, officials are eager to ensure they don’t miss out on potential revenue as bitcoin goes mainstream.
As a first step, the Danish tax authority this year asked the tax board to decide whether using bitcoin constitutes speculation. Back in 2014, Denmark decided bitcoin wasn’t a currency, meaning it initially wasn’t possible to tax under capital gains rules. But authorities now feel a review is needed, given the cryptocurrency’s stratospheric growth of late.
“Whether buying and selling bitcoin is to be seen as speculation” is “key in determining whether bitcoin gains need to be taxed,” Karsten Lauritzen, the Danish tax minister, told Bloomberg.
That said, if the tax board “arrives at a conclusion with which politicians, or I as tax minister, don’t agree, then we still have the possibility to create legislation, and to adjust it,” he said. The board is due to meet at the earliest on Jan 30, after which a ruling is expected.
As the tax board mulls whether bitcoin trading constitutes speculation, it will probably have noticed that the cryptocurrency has soared more than 1,600% this year. This month, there were several days on which gains topped US$1,000.
On Dec 19, it dropped more than US$1,700. In other words, bitcoin has delivered the kind of sudden moves that a white-knuckled speculator’s dreams are built on.
“From a consumer perspective, there can be advantages” to bitcoin, Lauritzen said. “But as a politician I can also see some pretty huge challenges.” — Bloomberg