EU officials say the European Commission is preparing to discuss with member states whether to adopt a common tax regime for crypto-assets. Discussions with national treasuries are expected to begin next year with the aim of ending the disparate tax treatment of cryptocurrencies in the Union’s 27 jurisdictions.
EU to Consider Single Taxation on Cryptocurrency Income and Profits
The European Commission, the governing body in Brussels, intends to start discussions soon with member states’ finance ministries to determine whether it is justified to establish an EU-wide tax on cryptocurrencies, a political report citing three EU officials revealed on Thursday. .
Discussions are expected to begin in 2023, sources told the publication. As cryptocurrency wealth is currently subject to different taxes in each country, they will focus on sharing best practices. A spokesman for the commission said of the initiative:
Difficulties in classifying, valuing and managing crypto-assets pose challenges to tax administrations seeking to tax them fairly and efficiently.
However, before implementing the single tax system, the EU must introduce new requirements for cryptocurrency companies to collect details of the owners of digital assets, whether they are individuals or companies, and share them with tax authorities across the EU. Report.
This will allow the tax authorities to get a clear idea of the crypto holdings. The European Commission is expected to propose the regulation in December or January, but is expected to start implementing it in 2026, allowing for a cryptocurrency tax the following year.
European institutions are working on a comprehensive legislative framework for cryptocurrencies called Crypto Asset Markets.Micah), which was approved this summer. The need to translate the complex legal document into all official EU languages has delayed its adoption, according to media reports. MiCA is expected to come into effect in 2024.
Currently, member states use different rules to tax income and capital gains from cryptocurrencies, with rates ranging from zero to 33%, Politico notes. Authorities in some European countries are reviewing their policies in anticipation of a possible decision at the EU level.
The PortugalFor example, it does not tax profits from crypto trading unless they are part of a business activity, and now wants to tax profits from short-term crypto investments from 2023. According to next year’s budget, the tax rate will be 28% per annum.