With tax season upon the United States, the Internal Revenue Service announced Tuesday that bitcoin can be taxed like a property rather than a currency. The bitcoin community is debating whether this is good news or bad news, but Danish bitcoiners might be celebrating this week.
According to the Scandinavian nation’s TV2 (via NewsBTC) and Politiken, the nation’s Tax Board has concluded that individuals buying or selling the virtual currency are not required to pay tax. In addition, bitcoin owners cannot write down any losses in digital holdings as deductibles on their tax returns.
The officials made the decision that the digital currency is a private asset and any gains made will not be taxable. Hanne Søgaard Hansen, the chairman of the Tax Board, noted that transactions between bitcoin consumers are a private matter.
“They have postponed this decision since December and were originally supposed to come to a conclusion in January,” Michael Popp-Madsen, a member of Denmark’s bitcoin community, told Coin Desk. “Today is the first time they have made a decision, and I think that’s a sign that the Tax Board was unsure how to approach bitcoin.”
Late last year, the Danish government was considering drafting new rules and applying heightened regulations to bitcoin. The efforts were akin to what its neighboring countries were doing at the time – Norway confirmed that it wouldn’t recognize bitcoin as legal currency and the digital currency would be subjected to a capital gains tax.
“There are clearly issues that need to be solved on the use of Bitcoins,” Benny Engelbrecht, spokesman for Denmark’s ruling Social Democrats on the parliament committee overseeing financial regulation, told Bloomberg News. “There’s clearly a need to regulate Bitcoins and other virtual currencies; it’s not something we can do on our own. It has to be done on the European level and globally.”
It remains to be seen if other Scandinavian states will be revising their stance on bitcoin.
