EU wants to ‘level the playing field’ for crypto companies with uniform tax rules

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Businesses of any size processing crypto transactions for customers in the European Union will soon have to report them for tax purposes under the proposed legislation.

The policy, presented as a complement to a broader set of anti-tax avoidance measures, stipulates that even non-EU crypto-asset operators will have to report transactions if they have customers who are EU residents.

Companies should provide tax authorities with personal information about their users, including their place of residence, date and place of birth. Along with that, they should include how much that person spent buying cryptos, or how much they received selling them.

Policymakers said in a paper outlining the directive that introducing a requirement to report income generated from crypto investments would help EU member states get an accurate picture of the taxes owed to them, leading to additional revenue of up to $2.4 billion ($2.53 billion).

Common reporting rules would also help the industry, according to the commission.

Transparency on the income earned by crypto-asset investors would improve a level playing field with more traditional assets, according to the proposal.

For the EU, implementing the rules would initially cost 300 million, followed by an additional 25 million each year.

As for the companies affected, policymakers say the initiative would have a limited impact on small and medium-sized businesses, arguing that the information to report is already available to them.

Although the initiative entails compliance costs, it may be more beneficial for SMEs to have a single set of rules across the EU, rather than a potential patchwork of reporting requirements across the whole of the EU, according to the Council’s impact assessment summary.

Crypto Advocates Push Back on EU

Industry advocates fear the regulations will place an undue burden on companies operating in the region.

Information requested from CASPs [Crypto Asset Service Providers] is extremely large and complex to calculate, European Crypto Initiative President Simon Polot told Decrypt. The estimated cost for service providers seems underestimated, and the mass of information to be produced and sent will be enormous. Will be [Member State] Does the tax administration have the means to process this information?

Comments on the adopted act are open for at least eight weeks, after which any response will be presented to the European Parliament and the Council as part of the legislative debate.

The EU is finalizing its landmark set of crypto regulations, Markets in Crypto Assets, dubbed MiCA.

The bill, which would establish a framework for crypto services among its members, is expected to be voted on in February.

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