Enforcing Taxes on Cryptocurrencies:Limits to Taxation in the Digitalized Economy

Hjalte Fejerskov Boas and Mona Barake
Additional contact information
Hjalte Fejerskov Boas: Department of Economics, University of Copenhagen
Mona Barake: Skatteforsk, NMBU

No 24-21, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: Digitalization challenges tax collection by allowing economic activity to move beyond the reach of domestic enforcement. We study this challenge in the cryptocurrency market by exploiting the introduction of domestic third party reporting, a cornerstone of modern tax enforcement. Combining micro data on crypto transactions, tax returns, and cross-border bank transfers from Denmark, we document pervasive crypto tax noncompliance. Third party reporting modestly increases self-reported income while simultaneously inducing a shift in activity beyond the regulatory reach of domestic tax authorities. This flight to opacity limits the effectiveness of unilateral tax enforcement and highlights the need for international coordination.

Keywords: Digitalization; Cryptocurrencies; Tax compliance; Tax enforcement (search for similar items in EconPapers)
JEL-codes: D31 H24 H26 H31 K34 (search for similar items in EconPapers)
Pages: 27
Date: 2026-09-25
New Economics Papers: this item is included in nep-iue, nep-pay, nep-pbe and nep-pub
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_21-24.rev.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2421

Access Statistics for this paper

More papers in CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI) Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().