The European Commission is about to start discussing with EU member states about adopting a general crypto tax system. This was recently made known by EU officials. The discussions will begin next year and it plans to end the different tax regimes in the 27 countries.
The Unified Tax Regime
The European Commission plans to have this discussion with Finance Ministers from the EU states. Reports from EU officials said the first part of the talks would be consultative. The Commission would find out if the common tax law is welcome by all in the first place. According to the quoted sources, the consultations will begin next year.
They would proceed to exchange the best approaches with regard to the subject matter. Seeing that digital wealth is addressed differently across the EU. An EU Commission spokesperson shared comments to explicate the initiative. They said the difficulty in valuing, classifying, and administering digital assets has created a challenge.
Holders have, therefore, not been taxed effectively on fairly. But before the EU can implement a unified tax system, it has to ask crypto firms to collate the details of asset holders. This would be the details of businesses, as well as individuals.
They would then share those details with tax authorities throughout the EU. The information will give tax authorities full details about digital assets ownerships. The EU Commission might present the proposal in December or in January but enforcement might wait till 2026. It would give room for the tax to be imposed later in 2027.
The MiCA and Domestic Laws
There has been a legislative proposal in the works within the EU called Markets in Crypto Assets (MiCA). The terms of the legislation were ratified this summer. There are reports that the delay before it’s adopted is for the need to have it translated into all EU official languages.
MiCA is expected to come into full operation in 2024. For now, the EU member states run different laws for crypto compliance. Their different tax regimes range from no tax at all to 33%. Some financial authorities in Europe are already revising their policies ahead of the EU’s decision.
They are starting to implement domestic crypto regulations that would blend into the general one. Portugal is one such example. The country did not tax profits made from trading crypto before now.
But it is working on a levy on crypto investments that are short-termed and it would come into effect next year. The 2023 budget says traders who make a profit on investments within a year would pay 28% in taxes.