EU Adopts Regulations to Increase Tax Transparency for Crypto Assets
The European Union has strengthened its stance on tax transparency regarding digital assets. EU finance ministers have formally adopted regulations that require crypto companies to disclose information about their customers’ assets. This data will subsequently be accessible to the tax authorities of member states. This decision stems from measures proposed last year aimed at preventing cryptocurrency assets from facilitating the concealment of wealth abroad.
The directive will enhance member states’ ability to detect and combat tax fraud, evasion, and hiding by requiring all EU-based crypto-asset service providers, regardless of size, to report transactions carried out by clients residing in the EU.
Inclusion of Various Digital Assets
While the discussion has been shrouded in secrecy, the confirmation revealed the expansion of existing regulations to encompass a wider range of digital assets. This now includes stablecoins, decentralized finance (DeFi) tokens, non-fungible tokens (NFTs), and crypto staking products. This move aligns with the transparency momentum propelled by the Eighth Directive on Administrative Cooperation (DAC8).
Complementary to MiCA and Anti-Money Laundering Measures
The European Commission shed light on how the crypto provisions of DAC8 complement the recently finalized MiCA and the regulations governing the Transfer of Funds Regulation (TFR). The overall goal remains to increase member states’ capacity to identify and counter tax fraud and evasion. Ensuring that all EU-based crypto service providers, regardless of their scale, report transactions of clients residing in the EU is deemed crucial for this initiative.
By further expanding the regulatory net, the commission revealed the broadening of these standards to encompass financial institutions dealing with electronic money and central bank digital currencies (CBDCs).
