- EU set to decide on crypto taxes next week
- Regulators agree tech could help with tax collection
- The new draft report presented by Portuguese EU Member of Parliament
The EU commission’s stance on crypto taxes and regulations has been shaky for the longest time. On the one hand, the EU parliament has expressed disdain for digital currencies. On the other, there seem to be members who are warming up to the idea.
One such person is the Portuguese member of the EU Parliament, Lidia Pereira, who recently tabled a draft report that will steer talks into making tax laws and procedures tighter, to prepare for Web 3. The lawmakers will meet on April 25th to discuss the draft and agree on the laws.
Blockchain technology could help transform tax collection
According to Pereira’s proposal, the EU commission can leverage blockchain technology to ensure tax collection is effective. She suggests that tax regulators can use blockchain to automate tax collection on crypto-asset holdings. Thanks to the technology, taxpayers simply have to give authorities their wallet addresses and they will take care of the deductions. The technology can even make it possible to have the deductions done right at the source.
While this may seem like an excellent option for giant companies, the proposal could present several issues with retail crypto users. Should the motion go through, it will strip EU crypto users of the privacy advantages of crypto transactions.
Mikulas Peksa’s remarks echo the above sentiments. The Czech member of the EU parliament agrees that big corporations in the finance and crypto industries should have some responsibility to authorities and be entitled to share the information on their transactions. However, he adds that regular crypto users shouldn’t be exposed to extra snooping.
That said, he agrees that although the technology presents several advantages, it doesn’t come with its fair share of challenges. He adds that a presentation by tax lawyers in November could have been the convincing factor for most lawmakers to agree that new technology could solve fraud and inefficiency in tax systems.
Current EU crypto tax regulations and policies
Cryptocurrencies are legal in the EU, although member states could be restricted from introducing sovereign cryptocurrencies. The tax regulations also vary by member state. Most states in the region charge capital gains on crypto-derived profits.
However, a few member states are considered some of the most crypto-friendly in crypto taxation. Portugal and Bermuda lead the pack, with Germany appearing unexpectedly on the list.
Of course, we also have to mention El Salvador, which is proving to be a trailblazer in the crypto adoption front. The country was the first globally to adopt Bitcoin as a legal tender and is now well on its way to actualizing Bitcoin City.
What next for crypto taxes?
There’s no denying that the EU’s decision will play a crucial role in the crypto markets, although it remains to be seen how the crypto taxation talks on Monday will pan out. But, one thing’s for sure; regulators and central authorities globally are slowly realizing the importance of digital currencies and are now paying more attention.
