Brussels Set To Begin Discussions On EU Crypto Tax: Reports
The European Commission is planning to discuss the adoption of a single tax policy for crypto assets with member states.
The discussions with national treasuries are likely to begin next year.
The goal is to end the disparate tax treatment of cryptocurrencies among the EU's 27 member states.
According to a report by a local media outlet
citing three EU officials, the executive body in Brussels, the European Commission, aims to shortly initiate negotiations with the member states' financial ministries on whether establishing a Union-wide tax scheme for crypto is required.
The discussions will start in 2023, as per the reports. Their focus will be on exchanging best practices, as cryptocurrency wealth is now taxed differently in each country. A representative for the Commission elaborated on the initiative:
“Difficulties in categorizing, valuing, and administering crypto assets make it difficult for tax administrations to tax them fairly and effectively.”
However, before creating a single tax framework, the European Union must impose additional rules on crypto companies to collect information on digital asset owners, both individuals and businesses, and share it with tax authorities across the EU, the report remarks.
This would enable tax authorities with a clear picture of crypto holdings. The European Commission is anticipated to propose such laws in December or January, but they will most likely be enforced in 2026, allowing it to implement the crypto tax the following year.
This summer, European institutions agreed on Markets in Crypto Assets (MiCA), a comprehensive legislative framework for cryptocurrencies. As per media reports, the delay was caused by the necessity to translate the complicated legal document into all of the EU's official languages. MiCA is expected to go into effect in 2024.
Currently, member states use different rules to tax crypto income and capital gains, with rates ranging from zero to 33%. Authorities in certain European nations are modifying rules in anticipation of a future EU decision.
Portugal, for example, which previously did not tax earnings from crypto trading unless they were part of a business activity, now plans to apply a tax on profits from short-term crypto investments beginning in 2023. According to the budget for next year, traders who cash out any crypto gains earned in less than a year would incur a 28% tax.
Do you believe the EU will eventually implement a unified tax framework for crypto assets? Please share your thoughts in the comments box below.
