The world's largest sperm bank, Cryos, will most likely close shop in Denmark, Ole Schou, the company's director said.
The tax ministry's decision that sperm donors needed to report their earnings from Cryos would dry up the company's pool of contributors, he said.
'It's as if the tax authorities obtain the most sensitive information in a medical journal. That is completely unacceptable,' Schou told daily newspaper Jyllands-Posten. 'We are preparing to shut down and will move our production to the US where our distribution is currently located.'
Since 1990, Danish sperm banks have been able to pay donors a transportation compensation of about DKK 200, which is tax free for the recipient and tax deductible for the company. The tax ministry's decision changed that, however.
The vast majority of donors said they were unwilling to continue as donors if they had to report their side income to tax authorities. Only 7 percent planned on continuing to provide their services, according to a survey conducted by Cryos.
The threat of having to pay taxes was not the major concern for the donors, according to the survey. Staying anonymous was.
'Being a sperm donor is not a job and should likewise not be taxed as the tax ministry states. A child comes out of the process, and the donor father has a unique need to remain anonymous,' said Schou, who started the company in the Jutland city of Århus in 1987.
The change in taxing practices would also affect the people making use of the company's products, said Tina Ovesen, the chairperson of an organisation for couples unable to become pregnant.
'It's a shame if in the future you have to obtain sperm in the US. That would probably make the procedure more difficult and costly,' said Ovesen.
The tax minister, Kristian Jensen, dismissed suggestions that donors' anonymity would be threatened by the practice, however.
'We have a very high level of data discipline and strong focus on protecting the information we store,' said Jensen. 'So for something as sensitive as a sperm bank and its ''suppliers'', we would naturally keep a close eye on confidentiality.'