Credit: loveyousomuch/Shutterstock.com EU Aims to Require Crypto Providers to Report Transaction Data
The European Union proposed new rules Thursday to combat tax fraud and evasion in the crypto sector by requiring all digital asset service providers to report transactions involving customers residing in the bloc.
December 08, 2022 at 03:01 PM
2 minute read
The European Union proposed new rules Thursday to combat tax fraud and evasion in the crypto sector by requiring all digital asset service providers to report transactions involving customers residing in the bloc.
The initiative by the EU's executive arm, part of a package to increase the transparency in the tax system, aims to ensure that the bloc's residents pay taxes on gains from trading or investing in crypto assets. It would establish a common minimum level of penalties for cases of serious non-compliance, including the absence of reporting despite reminders.
"The cover of anonymity, the fact that there are more than 9,000 different cryptoassets currently available, and the inherent digital nature of the trade means that many cryptoasset users that are making huge profits fall under the radar of national tax authorities," the bloc's economy commissioner, Paolo Gentiloni, said in a prepared statement.
The European Commission said that tax authorities currently lack proper information about the gains of crypto holders, limiting the tax revenues deriving from a booming sector.
The rules would cover crypto-service providers of all sizes and both for domestic and cross-border transactions, regardless of where the entities are based. The commission also proposed extending the reporting obligations of financial institutions to cover e-money and digital currencies.
The proposal is in line with new reporting rules agreed by the Organization for Economic Cooperation and Development and is expected to enter into force on January 2026. It also needs the unanimous approval of the bloc's 27 member states.
The plan is part of a commission package to align the EU tax system with the digital world and fight against tax evasion. According to the commission's latest estimates, member states lost €93 billion ($97.8 billion) in 2020 in VAT revenues, one quarter of which can be conservatively attributed to fraud.
Jorge Valero reports for Bloomberg News.
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