The Danish Customs and Tax Administration published Tax Council Binding Answer No. SKM2023.425.SR, which provides clarification regarding the taxation of digital currency locking and release. In this case, the taxpayer deposited digital currency on a specific platform with the expectation of receiving a return after a “locking” period of up to 12 months. During this time, the platform used the deposited currency as collateral for lending to third parties. The taxpayer sought clarification on the tax implications of this locking and release process.
The Tax Council’s response included the following key points: