The European Union’s Council has enacted a directive to improve coordination between national tax agencies, specifically concerning crypto asset transactions. The Oct. 17, 2023, announcement represents a substantial change in the way the EU regulates crypto assets, indicating a proactive stance toward the economy’s fast digitalization. The directive proposes extensive modifications to EU regulations on administrative cooperation in taxation.
This momentous move complies with recommendations made by the council in its report on tax matters to the European Council on Dec. 7, 2021. It indicated expectations that the European Commission would present a legislative proposal in 2022 for an additional revision of Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC), which deals with the sharing of data on tax rulings for high-income individuals and crypto-assets.
The council approved the proposed revisions to the directive on May 16. Subsequently, the EU Parliament provided its input on the directive on Sept. 13, 2023, as part of the consultation process. The primary objective of the directive is to reinforce the existing legal framework by expanding the scope of registration and reporting responsibilities while also enhancing overall administrative coordination among tax authorities.
A crucial element of this effort involves incorporating additional asset and income categories, with a specific focus on digital assets. These new regulations mandate the automatic exchange of information between tax agencies, which must be provided by crypto-asset providers.
The EU has long recognized the challenges posed by the decentralized nature of crypto assets in ensuring tax compliance across member states. According to the union, the intrinsically transnational nature of crypto assets demands strong international administrative collaboration to guarantee efficient tax collection.
This directive represents the EU’s response to these challenges and encompasses a wide array of crypto assets, including e-money and decentralized tokens, stablecoins and certain NFTs. The directive is integral to the EU’s standard rules governing national fiscal and monetary policies, which apply uniformly to all member states. The regulations aim to alleviate macroeconomic imbalances, encourage convergence and guarantee the sustainability of public finances.
Nadia Calviño, the acting first vice president of Spain and minister for digitalization and economy, stated that this move aims to reach a balanced agreement by the end of the year, maintaining the economic and monetary union and setting the way for sustainable growth and budgetary prudence.
The directive received unanimous approval from member states within the council. It is now set to be published in the Official Journal and will come into effect 20 days after that.
Crypto companies such as Bit Mining Ltd. (NYSE: BTCM) will be watching to see whether other jurisdictions adopt similar rules to what the EU has passed.
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- Source: https://www.cryptocurrencywire.com/eu-passes-resolution-to-strengthen-regional-cooperation-on-crypto-tax-information-sharing/
