New EU Tax Transparency Rules For Crypto Assets

The Ecofin Commission, which consolidates European Union finance ministers, has introduced new tax transparency rules to help member countries shed light on the digital currency asset sector.

“Fair and efficient taxation is essential to guarantee returns on investment and public services, while laying the foundations for a business environment, in which innovation can flourish,” the European Commission said in an explanatory note. “However, tax authorities do not currently have the information needed to monitor income received using assets in cryptocurrencies, which are easily traded abroad.”

The result is poor financial transparency, leading to significant losses in tax revenue for European states. The purpose of the new directive is to improve the ability of EU states to detect and therefore combat possible income concealment and tax evasion by requiring all service providers for holders of crypto wallets established in the EU, regardless of their size, to report the transactions of customers who are residents of the European Union countries.

The new “comprehensive and transparent” EU legislative framework also aims to guarantee legal certainty, thereby creating an “attractive business environment”.

“The scope of the updated Directive has also been extended to the reporting obligations of financial institutions in regards to electronic money and digital currencies of Central Banks, as well as to the automatic exchange of information on procedures for preliminary disputes on cross-border transactions between Financial Administrations and individuals,” the supporting document emphasizes.

The EU believes that both businesses and individual users will benefit from the innovation, since the rules of communication will be the same throughout the European Union.