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Brussels to start negotiations on EU tax on cryptocurrency

The European Commission is preparing to discuss with member states about adopting a common tax regime for crypto assets, EU officials have said. Discussions with national treasuries are expected to begin next year with the aim of ending the differential tax treatment of cryptocurrencies across the EU’s 27 jurisdictions.

The European Union will consider a single tax system for cryptocurrency income and profits.

The executive body in Brussels, the European Commission, intends to soon begin discussions with member states’ finance ministries to determine whether the establishment of an EU-wide tax system for cryptocurrencies is justified, a Politico report revealed Thursday, citing three E.U. -officials. .

Discussions are expected to begin in 2023, the sources told the publication. They will be focused on sharing best practices as cryptocurrency wealth is currently subject to different taxes in each country. Commenting on the initiative, a spokesperson for the Commission said:

Difficulties in classifying, valuing and managing crypto-assets pose challenges to tax administrations seeking to tax them fairly and efficiently.

However, before implementing a single tax regime, the EU must introduce new requirements for cryptocurrency companies to collect information about owners of digital assets, whether they are individuals or companies, and share them with tax authorities across the EU, the report said. notes.

This would enable tax authorities to have a clear idea of ​​crypto holdings. The European Commission is expected to propose this regulation in December or January, but it is expected to start enforcing it in 2026 so that it can impose the cryptocurrency tax the following year.

European institutions have been working on a comprehensive regulatory framework for cryptocurrencies, called Crypto Asset Markets (MiCA), which was approved this summer. The media attributed a delay in the adoption to the need to translate the complex legal document into all official EU languages. MiCA is expected to enter into force in 2024.

Currently, member states use different rules to tax income and capital gains from cryptocurrencies, with rates ranging from zero to 33%, notes Politico. Authorities in some European countries are reviewing their policies in anticipation of a possible decision at EU level.

Portugal, for example, which did not tax gains from crypto trading unless they were part of a commercial activity, now intends to impose a tax on profits from short-term crypto investments from 2023. Traders cashing out crypto gains made in less than a year face a tax of 28% according to next year’s budget.

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