Buying, selling and trading Bitcoin in Denmark is fairly easy due to a large number of Bitcoin exchanges that operate freely.
Many fintech companies in Denmark that specialize in blockchain technology and cryptocurrency are offering a solution for Bitcoin and other cryptocurrency payments.
The Danish Government promotes digitization and has already initiated a set of projects that aim to improve the country’s digital infrastructure, its information security and, in a unique and ambitious project, to gradually eradicate the use of paper money.
Cashless payment methods have become more popular in Denmark. As part of this digitization trend, cryptocurrency businesses in Denmark and fintech companies, in general, may explore the various opportunities.
Our Danish company formation agents can give you complete details on the requirements for investors, including those for foreign entrepreneurs in the country.
The crypto license in Denmark
Compliance with the current regulations for virtual asset services providers is a key issue to consider when opening a cryptocurrency company in Denmark.
The Danish financial sector is subject to regulation and control and various acts govern the licensing and conditions set forth for companies in this field.
The Danish Financial Supervisory authority is the main regulator and supervisor, however, the national bank (Nationalbanken) also has a role.
A crypto license in Denmark is not issued per se, however, requirements are in place for virtual asset service providers.
The virtual asset service provider license issued by the supervisory authority allows the holder to offer services related to:
- exchanging between virtual currencies and fiat currencies;
- exchanging between more than one type of virtual currency;
- transfer virtual currencies.
Regulations are in place for virtual currencies that fall under the definition of a financial instrument. In these cases, public offerings are subject to the prospectus requirements.
For those investors willing to apply for the equivalent of a crypto license in Denmark, the one for virtual asset service providers, the following regulations are of interest:
Exchange regulations: the exchange can be subject to financial regulation when the virtual currency falls under the definition of a financial instrument; virtual currency exchanges are subject to the AML Act (detailed below);
Mining regulations: no regulation is currently in place for the mining of virtual currencies;
Issuers regulations: ICO issuers and sponsors in Denmark are also subject to the AML law; the same law also applies to investors in cryptocurrencies.
The anti-money laundering (AML) Act was amended in 2020 to comply with the EU’s 5th Anti-money laundering Directive.
The Directive introduced the principles for regulating providers involved in exchange services between virtual currencies and fiat currencies and also for custodian wallet providers.
The AML Act also includes a number of provisions introduced in 2021 for the those who offer exchange platforms for the trading of virtual currencies, as well as those who provide virtual currency transfer services. All of these providers are now also subject to the AML Act.
The taxation of cryptocurrency activities in Denmark
While there are no specific tax rules for virtual currencies, companies that provide virtual asset services are subject to the regular taxes in the country.
Income from virtual currencies is regulated under the Danish National Tax Act.
Income derived from the disposal of assets is not subject to tax in Denmark unless deemed income from speculation. Speculation from virtual currencies is subject to an assessment.
Some of the following tax rates are relevant to these types of activities:
22% the standard income tax applicable to the net income of a Danish company that is engaged in the buying and selling of virtual currencies;
the individual income tax rate in Denmark has progressive rates between 8% and 56.52%;
the capital gains tax rate for individuals is 27% or 42%.
For individuals involved in mining activities, the activity can be subject to tax on the next income produced in the income year. Losses cannot be deducted in other income nor carry forward losses.
How to open a company in Denmark
The steps needed to open a Danish company are summarized below:
choosing a type of legal entity, according to the business size and goals;
For any company formation related matters, including the equivalent of the crypto license in Denmark, our specialists are ready to answer your questions.
The following video shows some of these ideas for starting a cryptocurrency business:
The list below contains five ideas for a cryptocurrency businessand a few issues to consider about each suggestion.
Cryptocurrency exchange: a simple exchange platform that allows users to exchange cryptocurrencies. The owner derives his profits from the difference between the purchase and sale prices.
Cryptocurrency trading platform: this is similar to a traditional stock exchange and is a trading hub in itself. The owner will derive his benefits as a percent from the transactions.
An ATM for cryptocurrencies: the BTM, a special ATM for cryptocurrencies will work as an ATM only that users will insert cash in order to receive cryptocurrency/Bitcoin divisions. The startup costs will include purchasing the machine and having the capital for the initial supply.
Become a consultant: the need for cryptocurrency consultancy is believed to expand as the usage rate will grow and businesses will become more interested in setting up this payment method. Offering consultation to companies can be a business idea.
Digital wallet business: developing and providing digital wallet services which are essentially the means through which a cryptocurrency owner can start making online transactions.
Our team can help you open a company that will provide virtual asset services, essentially applying for a crypto license in Denmark.
Investors who want to open a company in Denmark can contact us for detailed information regarding each of the company formation steps.
Call us now at+45 71 99 22 11to set up a meeting in Roskilde. As our client, you will beneficiate from the joint expertise of local experts and international consultants for opening a company in Denmark.
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