Data from the Danish Tax Agency reveals that over 90% of crypto traders did not report their gains or losses. Many have opted to use foreign exchanges to bypass Denmark’s reporting regulations. These insights are from a study by Hjalte Fejerskov Boas and Mona Barake, published by the EU Tax Observatory. The researchers analyzed trading data from Denmark’s three regulated crypto exchanges, tax filings, and cross-border bank transfer records. They discovered that more than 90% of Danish investors who sold digital assets in 2021 failed to declare any crypto income on their tax returns. Despite Denmark’s 2019 requirement for domestic exchanges to automatically provide transaction data to tax authorities, this high level of noncompliance remained the same.
The study found widespread nonreporting across all wealth levels, ranging from 95% among lower-income investors to 86% among the wealthiest, indicating that crypto tax evasion is not just a concern for the very rich. Rather than adhering to the regulations, many Danish traders have moved their activities offshore. Bank transfer records show a significant shift from domestic to foreign exchanges following the implementation of the reporting rule. Denmark’s findings are consistent with trends in other countries. A recent Norwegian study estimated that about 88% of crypto traders did not report gains in 2023, while US IRS data suggests less than 1% of American taxpayers reported crypto profits in 2020. Experts point to the anonymity provided by blockchain technology and the easy access to unregulated international exchanges as reasons for widespread underreporting.
In response, global policymakers are working towards establishing coordinated reporting standards. Starting in 2026, the OECD’s Crypto-Asset Reporting Framework and the EU’s DAC8 will require crypto platforms worldwide to share transaction data with tax authorities. However, critics caution that the success of these measures relies on universal participation, as decentralized peer-to-peer trading and uncooperative jurisdictions could still challenge enforcement efforts. Domestically, Denmark is considering stricter measures. In October, the Danish Ministry of Taxation proposed a 42% tax on unrealized gains from cryptocurrencies acquired since Bitcoin’s inception in January 2009. Tax Minister Rasmus Stoklund argued that the current capital gains regime has been unfair to many crypto investors, and the new rules aim to simplify the taxation of crypto gains.
🔍 New research indicates that despite stricter rules in Denmark 🇩🇰, over 90% of crypto investors fail to declare income! Domestic enforcement alone has limited effectiveness—global coordination is key to tackling crypto tax evasion. Read more via @TaxNotes: pic.twitter.com/igL0EFFmqL — EU Tax Observatory (@taxobservatory) March 20, 2025
