The European Commission is preparing to discuss with member states 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 27 jurisdictions of the Union.
The European Union will consider a single tax regime for cryptocurrency income and profits.
The executive body in Brussels, the European Commission, intends to start discussions soon with the finance ministries of the Member States to determine whether the establishment of an EU-wide tax regime for cryptocurrencies is justified, a Politico report revealed Thursday, citing three EU officials.
Discussions are expected to begin in 2023, the sources told the publication. They will be focused on sharing best practices, as currently cryptocurrency wealth is subject to different taxes in each country. Commenting on the initiative, a Commission spokesperson said:
Difficulties in classifying, valuing and administering crypto-assets pose challenges for tax administrations seeking to tax them fairly and efficiently.
Before implementing a single tax regime, however, the European Union must introduce new requirements for cryptocurrency companies to collect details of the owners of digital assets, whether they are individuals or companies. companies, and share them with tax authorities across the EU, notes the report.
This would allow 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, allowing it to impose the cryptocurrency tax the following year.
European institutions have been working on a comprehensive legislative framework for cryptocurrencies, called Crypto Asset Markets (MiCA), which was approved this summer. The media attributed a delay in its adoption to the need to translate the complex legal document into all official EU languages. MiCA is expected to come into force in 2024.
Currently, member states use different rules to tax income and capital gains derived from cryptocurrencies, with rates ranging from zero to 33%, Politico notes. The authorities of 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 levy on profits from short-term crypto investments. term from 2023. Traders who cash out crypto gains made in less than a year will face a 28% tax, according to next year’s budget.